Newfi Lending has introduced EquityChoice, a proprietary shared appreciation mortgage.
“Newfi has created a groundbreaking new offering that meets homeowner needs for liquidity by combining the benefits of home equity sharing options such as no monthly payments with a traditional mortgage,” says Steve Abreu, founder and CEO of Newfi, in a release. “Our goal is to simplify the mortgage process in ways that gives financial control back to homeowners.”
EquityChoice gives borrowers access to a portion of their home equity at a below-market fixed interest rate, while sharing in a portion of the home’s future appreciation.
Newfi says it gives borrowers the ability to keep their original low-interest primary loans intact yet gain immediate access to capital without needing to reduce monthly cash flow.
Borrowers also benefit from standard mortgage loan terms and lender obligations that provide built-in safeguards.
The offering provides a unique financing tool for homeowners to better manage their wealth while creating an entirely new asset class for investors, Newfi says.
U.S. homeowners in 2023 amassed more than $28 trillion in housing wealth, but ongoing high interest rates have made them hesitant to tap into their home equity with traditional financing options. EquityChoice solves this problem by providing homeowners with immediate access to capital at a below-market fixed interest rate, while sharing in a portion of their home future appreciation, the company says.
By design, EquityChoice also benefits investors in being REMIC eligible and capital efficient, two necessary preconditions for broad market acceptance over the next five years.
Newfi channel partners and service vendors will be able to earn revenue from an entirely new source despite one of the most challenging times the mortgage industry has experienced in decades, Newfi says.