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Shared equity platform Point has launched its services in Nevada and Ohio as part of a plan to be in 28 markets by early next year, following a $115 million Series C fundraise in May.
With Point’s expanded footprint, homeowners in 18 states and Washington, D.C. can tap up to $500,000 in home equity by selling a share of their future home price appreciation to investors.
Point co-founder and CEO Eddie Lim put the amount of tappable home equity in Ohio at $330 billion and at $150 billion in Nevada.
“The vast majority of homeowners in both states have tappable equity and are sitting on an incredible amount of wealth in their homes,” Lim said in a statement. “However, their equity isn’t always readily accessible to help with life’s needs or to achieve a dream. And with mortgage rates on the rise, refinancing is a less attractive way to leverage home equity.”
To qualify for Point’s flagship Home Equity Investment (HEI) product, homes must be worth at least $155,000 and homeowners must retain 20 percent of the equity after Point’s investment.
Homeowners pay an up-front processing fee of 3 percent to 5 percent plus the cost of an independent appraisal. But unlike a home equity line of credit (HELOC) or cash-out refinancing, Point’s HEI doesn’t require monthly payments.
Instead, homeowners pay Point a share of the home’s appreciation in a lump sum when they’re ready to buy the company out — typically when they sell or refinance their homes. If the home has lost considerable value, Point shares in the losses. If the home simply holds its value or appreciates, Point can earn a better return on its investment than mortgage lenders typically charge.
In addition to Nevada and Ohio, Point’s HEI is available in select markets in Arizona, California, Colorado, Florida, Illinois, Maryland, Massachusetts, Michigan, Minnesota, New Jersey, New York, North Carolina, Oregon, Pennsylvania, Virginia and Washington as well as Washington D.C. Point said it plans to expand into nine additional states by early 2023.
In announcing its Series C fundraise in May, Point said it was developing a new product aimed at homebuyers, Seed, which will provide up to 15 percent of a home’s purchase price to put toward a down payment, helping buyers qualify for pricier homes and avoid private mortgage insurance.
Point’s website is currently asking would-be homebuyers who are interested in Seed to join a waitlist. The company had no additional information on when that program will go live.
Last year Point completed what the company touted as the first-ever securitization backed entirely by residential HEI agreements, and also announced more than $1 billion in new capital commitments from leading real estate and mortgage-backed securities (MBS) investors including Atalaya Capital Management, Kingsbridge Wealth Management, Palisades Group and Redwood Trust.
Founded in 2015 by Lim, Eoin Matthews and Alex Rampell, Point says it has raised more than $170 million in equity capital to date from backers including Westcap, Andreessen Horowitz, Ribbit Capital, Greylock Partners, Bloomberg Beta, Redwood Trust, Atalaya Capital Management, Kingsbridge Wealth Management, Deer Park Road Management, The Palisades Group, Alpaca VC and Prudential.