FAQWhat is an example scenario with the Minimum Appreciation Rate?

What is an example scenario with the Minimum Appreciation Rate?

Say a person has a $500,000 home, and the Minimum Appreciation Rate is agreed at 2.5%. If they take out $125,000 with Fraction Equity Financing, they are taking out 25% of the value of their home. If they sell their home 4 years later for $510,000, that growth would be less than what would be calculated from the Minimum Appreciation Rate, so the Minimum Appreciation Rate would apply. We would then set the home value for the purposes of calculating the amount owed to be around $552,000, (as that would be the value if the home grew in value by 2.5% a year). Therefore, they would pay out 25% of that value (i.e. $138,000).