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Key Takeaways
- Home equity investment companies typically charge origination fees between 4% and 5% of your cash advance, deducted directly from your proceeds at closing.
- The appreciation share due at the end of your HEI term is often a greater expense than upfront fees, making total costs less predictable than traditional loan interest.
- In addition to origination fees, you should anticipate appraisal, processing, and settlement transaction costs.
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Home equity investment companies typically charge origination fees between 4% and 5% of your cash advance, deducted directly from your proceeds at closing. That means a $100,000 HEI with a 4% fee leaves you with $96,000, not the full amount.
Origination fees are only one component of total costs. This guide details major HEI company charges, compares them to traditional home equity products, and explains how to calculate the true cost of accessing your equity.
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What is a home equity investment?
A home equity investment (HEI) lets you access your home’s value without taking out a traditional loan. Instead of borrowing money and paying interest, you receive a lump sum upfront and agree to share a portion of your home’s future value with the investor. Because an HEI is not a loan, it does not involve monthly payments or an interest rate.
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How a home equity investment works
An HEI provides cash upfront in exchange for a share of your home’s future appreciation or depreciation. The agreement typically concludes when you sell the home, refinance, or reach the end of the term, usually 10 to 30 years. This option may suit homeowners seeking equity access without new monthly payments.
How home equity investment origination fees work
HEI companies typically charge a 4% to 5% origination fee, which covers underwriting, processing, and agreement setup. This fee is deducted from your proceeds at closing rather than paid out of pocket.
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When origination fees are charged
Origination fees are charged once, at closing, after the agreement is finalized. The fee is taken directly from the investment amount before funds are sent to you. Unlike interest on a loan, this cost does not grow over time or repeat during the life of the agreement.
How fees are deducted from your proceeds
Several charges are deducted from the approved investment amount before funds are released, reducing your net cash received.
Typical deductions include:
- Origination fee, usually 4% to 5% of the investment amount
- Third-party fees such as appraisal, title search, and escrow services
- Administrative or processing charges that vary by provider
For example, with a $75,000 approval, a 4.5% origination fee, and $2,000 in closing costs, your final payout would be approximately $69,625.
What origination fees do HEI companies charge?
Origination fees differ among HEI providers, so comparing companies can significantly impact your net proceeds. Most fees range between around 4%-5%, though each provider structures pricing differently.
| Company | Origination Fee | Notes |
| Point | Up to 3.9% | Processing fee for HEI (min. $2,000); separate HELOC origination fee up to 4.99% |
| Hometap | 4.5% | Deducted from investment amount at closing |
| Unlock | 4.9% | Includes transaction expenses |
| Unison | 3.9% | Applies to equity sharing agreement; 3% for equity sharing home loan |
| Splitero | 4.99% | Min. $1,500; plus appraisal, title, and closing costs |
Point
Point charges a processing fee of up to 3.9% (minimum $2,000) on its Home Equity Investment product, which is among the lower fees in the space, though homeowners using its HELOC product will face a separate origination fee of up to 4.99%.
Hometap
Hometap charges a 4.5% origination fee, deducted directly from the investment amount at closing so there are no out-of-pocket upfront costs, placing it in the mid-range among HEI providers.
Unlock
Unlock charges up to 4.9% origination fee, which covers transaction expenses and is deducted from the homeowner’s proceeds at closing rather than paid upfront.
Unison
Unison’s fee structure depends on the product — its equity sharing agreement carries a 3.9% transaction fee, while its newer equity sharing home loan comes in lower at 3%, making it one of the more competitively priced options depending on which product the homeowner selects.
Splitero
Splitero charges a 4.99% origination fee (minimum $1,500). Homeowners should also factor in additional appraisal, title, and closing costs that are deducted from their payout.
Other HEI fees beyond origination
Origination fees are only one aspect of total costs. Understanding all applicable fees in advance helps you determine your actual net proceeds.
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Appraisal and home valuation fees
HEI companies require a professional appraisal or automated valuation, typically costing $350 to $600. Some companies include this fee in their origination charge. The valuation establishes the baseline for your future appreciation share. A lower starting value may result in a higher amount owed at the agreement’s end.
Processing and administrative fees
Some companies tack on separate processing fees for document prep, credit checks, and general administrative work. Other companies bundle everything into the origination fee. Either way, ask for a complete fee breakdown before you sign anything.
Settlement and transaction costs
At the end of your HEI term, you will incur additional costs:
- Title and escrow fees for the final settlement.
- Transaction fees are spelled out in your agreement.
- Costs tied to the home sale or refinance that trigger settlement.
Homeowners may overlook end-of-term costs when focusing on upfront expenses. Settlement fees can be significant, especially if you are also selling your home and paying real estate commissions.
Why are HEI costs harder to estimate than loan interest?
With a home equity loan or HELOC, the interest rate is known from the start, allowing you to calculate total costs. Home equity investments do not offer this predictability. The total cost of an HEI depends heavily on how much your home appreciates, and nobody can predict that with certainty.
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- Unknown appreciation: If your home gains 30% in value over 10 years, you’ll owe significantly more than if it gains 10% over the same period.
- No APR equivalent: There’s no standardized way to compare HEI costs to loan interest rates.
- Longer terms magnify costs: The appreciation share grows with both time and home value gains, so a 10-year HEI could cost far more than a 10-year loan.
Focusing solely on origination fees can be misleading. A company with a lower origination fee but less favorable appreciation terms may ultimately cost more than one with a higher fee and better sharing arrangements.
How HEI fees compare to HELOC and home equity loan closing costs
Comparing HEI costs to traditional options can help you make an informed decision.
| Product Type | Typical Upfront Fees | Ongoing Costs | Total Cost Factors |
| Home Equity Investment | 4% to 5% origination plus closing costs | None during term | Appreciation share at settlement |
| HELOC | 0.5% to 1% origination, $0 to $500 closing | Variable interest on balance | Interest rate, draw amount, repayment period |
| Home Equity Loan | 0.5% to 1% origination, 2% to 5% closing | Fixed monthly payments | Interest rate, loan term |
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HEIs have higher upfront fees than traditional products but do not require monthly payments during the term. Whether this tradeoff is beneficial depends on your cash flow and expected home appreciation.
Pros and cons of HEI fees
Home equity investment fees differ from traditional loan costs. Some features may be advantageous, while others require careful evaluation before proceeding.
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Potential benefits of HEI fees
- No interest accrual. Since an HEI is not a loan, the fee does not increase over time as interest does on credit cards or home equity loans.
- Deducted from proceeds. The origination fee is typically deducted from the investment amount at closing, so you do not need to bring cash to the table.
- More flexible qualification. For homeowners who cannot qualify for a HELOC or home equity loan, paying the fee may be worthwhile if it provides access to cash tied up in their home.
Drawbacks and risks to consider
- Lower cash payout. Since the fee is deducted from your proceeds, the amount you actually receive will be less than the approved investment.
- Appreciation share drives the real cost. The upfront fee is only part of the equation. In many cases, the investor’s share of your home’s future value ends up being the larger expense.
- Harder to estimate the total cost. The final amount you owe depends on how your home’s value changes over time, which makes it difficult to predict the true long-term cost.
How to reduce fees when choosing a home equity investment company
Compare multiple HEI loan companies
Getting quotes from at least three home equity investment companies gives you leverage and helps you understand the range of available terms. Origination fees, appreciation shares, and other terms can vary significantly from one provider to the next.
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Negotiate origination and processing fees
Some fees are negotiable, especially if you have substantial equity or are comparing multiple offers. Ask if the origination fee can be reduced, and obtain any agreements in writing before proceeding.
Calculate the full cost, including the appreciation share
Do not limit your comparison to origination fees. Model various appreciation scenarios, such as 10%, 20%, and 30% home value growth, to compare total costs across companies. Many HEI providers offer online calculators to assist with this analysis.
When a home equity investment may be worth the fees
Despite the costs, an HEI can make sense in certain situations:
- Limited income that makes monthly loan payments difficult to manage
- Credit challenges that prevent approval for a HELOC or home equity loan
- A preference for accessing cash without adding debt to your balance sheet
- Willingness to share future appreciation in exchange for payment flexibility
If you are evaluating your options, consider consulting a mortgage professional to help compare HEIs with traditional home equity products for your specific situation.
FAQs about home equity investment origination fees
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Home equity investment origination fees are generally not tax-deductible because HEIs are not classified as loans. The mortgage interest deduction does not apply. For guidance on your specific situation, consult a tax professional.
Origination fees are typically deducted from your proceeds rather than added to your balance. In effect, they are already included by reducing the amount you receive at closing.
Origination fees are non-refundable since they are deducted at closing. Settling early does not return these fees, though it may reduce the total appreciation share owed, depending on your agreement terms.
Yes, fees can vary by state due to different regulatory requirements and licensing costs. Also, not all HEI companies operate in every state, which may limit your options depending on where you live.
The information contained on The Mortgage Reports website is for informational purposes only and is not an advertisement for products offered by Full Beaker. The views and opinions expressed herein are those of the author and do not reflect the policy or position of Full Beaker, its officers, parent, or affiliates.
By refinancing an existing loan, the total finance charges incurred may be higher over the life of the loan.
