A HEA stands for home equity agreement, which is a financial option that allows homeowners to get a large lump sum without taking on additional debt payments or selling their property. In exchange for the lump sum, the HEA provider will receive a percentage of the homes future equity, and the term of the agreement is usually 10 years. Homeowners can continue to live in the property as normal during the term of the agreement. HEAs are different from home equity loans (HELs) and home equity lines of credit (HELOCs) because they are not loans and do not require monthly payments or interest charges. Instead, homeowners receive cash up front and can decide when the agreement ends by buying the providers equity at any time during the term.

To qualify for a HEA, homeowners need to have built up some equity in their property, but they do not need a super high credit score, and the income criteria are flexible. HEAs can provide homeowners with several benefits, such as no monthly payments or interest charges, and the ability to access their home equity without taking on additional debt payments or selling their property. However, HEAs can be costly, and homeowners should expect to pay a 3% to 5% origination fee, along with appraisal and settlement fees. Homeowners should also be aware that they will need to repay the equity plus a percentage of the homes appreciation, and if the homes value depreciates, they will still owe money.

In summary, a HEA is a financial option that allows homeowners to get a large lump sum without taking on additional debt payments or selling their property. Homeowners receive cash up front, and in exchange, the HEA provider will receive a percentage of the homes future equity. HEAs are different from home equity loans and home equity lines of credit because they do not require monthly payments or interest charges. However, HEAs can be costly, and homeowners should be aware of the fees and repayment terms before entering into an agreement.