'I'm torn between these two options'
"I own my home outright." (Photo subject is a model.)
Dear Quentin,
I am a 70-year-old male with no dependents, and I own my home outright. I don't think I'll make it to 80.
Are you familiar with home-equity sharing agreements (HESA) also known as a home-equity agreement (HEA) or home-equity investment $(HEI)$? Instead of borrowing money and making monthly installments - like with a traditional mortgage - a company provides an upfront lump-sum in exchange for a percentage of your property's future value or appreciation.
The advertisements I read about HESAs say they require their share to be repaid upon my death or after 10 years. If so, I'll either pay off the investor (if possible) or sell the house and rent an apartment. Is this worth considering? I have a decision to make: Do I get a home-equity conversion mortgage (HECM) reverse mortgage or do I choose a HESA?
I'm torn between these two options.
Septuagenarian Homeowner
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You can email The Moneyist with any financial and ethical questions at qfottrell@marketwatch.com. The Moneyist regrets he cannot reply to questions individually.
Be warned. Neither is reversible.
Dear Homeowner,
Think carefully before taking on either, especially if you are on Medicaid.
The fees are not cheap on either, particularly reverse mortgages, and you will be giving up a share of your home. If your home increases a lot in value over the next 5-10 years, that's another reason to proceed with caution. Ideally, you should be the beneficiary of any increase in value to your home. Be warned: Neither is reversible. You can only exit a reverse mortgage or HESAs through a home sale, refinance or buyout, or contractual settlement.
People generally give up a share of their home to a HECM or HESA because they have little other option. They may require aging-in-place expenses or need to consolidate their debts. Put bluntly, they are in financial distress, they need money and they need it now. Assuming you have a small income and you require money to have a more comfortable lifestyle and/or you need to complete a renovation, it may be a good (read: only) option for you.
Reverse mortgages carry myriad costs, including origination fees, closing costs and Federal Housing Administration (FHA) mortgage insurance. Interest accrues over time, which increases the loan balance. Reverse mortgages allow homeowners to convert a portion of their home equity into cash without the burden of monthly mortgage payments. The lender pays you instead of you making monthly payments as with a traditional mortgage.
HESAs do not charge interest, exactly, but they do require repayment based on the home's future appreciation, per your contract, and that can be punitive. For example, the investor may get 1.5 times or 2 times the appreciation on the home. It's not always an apples-for-apples calculation. Basically, the investor takes a percentage of your home's total sale price when you exit the agreement.
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How HESAs work
HESAs are binding, long-term contracts - typically 10 to 30 years. Once the funds are advanced, you cannot simply change your mind and return the money to cancel the agreement without incurring significant financial consequences. Most contracts allow a buyout or settlement under very strict terms, with the cost depending on the timing and valuation provisions. Exiting may also come at a higher price.
If you want to exit a HESA, you must sell the property and hand over the agreed-upon percentage of your home's equity. Alternatively, you could end the HESA agreement by paying the provider the appropriate share of your home's appraised value under a buyout clause, but this would require you to secure a new mortgage and/or use other personal funds. Most HESA providers allow buyouts after a specific period, but penalize early buyouts.
Some companies offer an open-term or buyout clause that allows you to trigger a buyout after a specified period (typically, 10 years), but this will require liquidating the funds required to pay off their share of the home's appreciation. HESAs are appropriate for homeowners who want a lump-sum payment and do not want to take on traditional debt.
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Reverse mortgages
Reverse mortgages or HECMs are loans offered to homeowners like yourself to tap the equity in your home. The loans are originated by private lenders and insured by the Federal Housing Administration, a part of the federal Department of Housing and Urban Development. Whether you take out a HECM or HESA, the home must be your primary residence.
There are different age requirements for each program: Reverse mortgages are available to those over the age of 62 (HESAs are available to qualifying applicants over 18). The lender pays you money and uses your house as collateral. The income is not taxable and generally does not affect Social Security or Medicare benefits. Because you are borrowing against your home's equity, you do not make monthly loan payments.
Interest rates and fees for reverse mortgages are not cheap and can range from 7.5% to 9% (including insurance and fees). You can sell the house and repay the loan, refinance into a traditional mortgage, or make payments to reduce the balance over time. Most people who take out federally insured reverse mortgages or HECMs cannot owe more than the home's value. Look at the equity tradeoff, fees and contract terms.
There are limits on how much you can borrow. The federally-insured HECM program caps the maximum property value used to calculate your loan at $1,249,125 (or $4 million for a "jumbo" mortgage). You typically can borrow up to 40%-60% of your home's value, depending on your age, interest rate and contract. How much you receive under a HESA depends primarily on the property's value and the investor's underwriting criteria.
If you're not in dire straits financially, keep full ownership of your home.
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By emailing your questions to The Moneyist or posting your dilemmas on The Moneyist Facebook group, you agree to have them published anonymously on MarketWatch.
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-Quentin Fottrell
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July 01, 2026 15:52 ET (19:52 GMT)
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