The average sales price for a house in the United States was $378,700 during the second quarter of 2019. At an interest rate of 4 percent, a 30-year mortgage would come with a monthly payment of $1,808 for a home at that price. For many, a monthly payment that high isn’t manageable. It’s that point that led to the creation of Haus, a new way to handle homeownership.
What is Haus?
Haus is a company that aims to lower how much you pay each month. It isn’t a mortgage company. Instead, Haus uses a cost-investment model to reduce your monthly payment.
If you buy a home and have this company become a co-investor, you share a portion of your home’s equity with them. Essentially, Haus purchases a right to a stake in your home’s value. In return, your mortgage payment could drop by 30 percent (on average).
You Own Your Home
While Haus may invest in your home, the company never owns any part of it. You remain the sole owner and retain all of the rights of ownership. The company is not listed on your title, so they have no say in what happens with the property.
However, Haus does benefit from the arrangement. As a co-investor, their stake in your home gains or loses value depending on how the value of your home changes. If your house is worth more, so is their stake, allowing them to earn money off of the appreciation. If, on the other hand, your home loses value, so does Haus’ share.
Selling Equity
In the simplest terms, you sell a portion of your home’s equity to Haus. You get to dictate the percentage of the equity that the company receives and how much remains yours. Additionally, you have the option to sell additional equity to them when it’s available, allowing you to gain access to cash in exchange for that equity. The only rule is that you must control more than 50 percent of the property’s value at all times, ensuring you stay the legal owner.
You can also repurchase your equity whenever you want. The purchase price you pay is dependent on your home’s value at the time. Once you determine how much equity you want to reacquire and make the payment to Haus, that portion becomes yours again.
If you do decide to sell your home and Haus still owns some equity, a portion of your home’s sale will go to Haus to cover the equity they own. Essentially, it would be the same as buying back that equity; the money just comes from the amount you receive for selling the property.
The Pros and Cons of Haus
The biggest pro is that Haus is designed to help you lower your monthly mortgage payment. In exchange for equity, Haus shoulders a part of your payment, allowing you to pay (on average) 30 percent less than with a traditional mortgage alone. This can improve your household’s cash flow, making it easier to manage your financial life.
However, the biggest con with Haus is that you are selling some of your home’s value. Over time, a portion of the value of your home is due to them if you choose to sell. You don’t get the full benefit of any appreciation, as you do have to purchase equity back from Haus.
For some, Haus may make homeownership more feasible. Having a lower monthly payment can be a big deal, and you always have the option to purchase your equity back at any time. Just be aware that you are effectively selling a stake in your house, so not all of the equity you build up is yours. Examine how each approach would work and see if this strategy is right for you before you commit.
Have you used Haus? Would you consider them a viable path to homeownership? Share your thoughts in the comments below.
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