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HELOC vs Home Equity Agreement

Home Equity Comparison

HELOC or Home Equity Agreement in Georgia: Which Costs Less?

Both turn the equity in your home into cash without replacing your first mortgage. A HELOC is a line of credit with an interest rate and a monthly payment. A home equity agreement, often called an HEA or a home equity investment, pays you cash today in exchange for a share of your home's future value, with no monthly payment and one large payment at the end.

The one minute answer: if you can carry a monthly payment, a HELOC usually costs less, and often much less if your home gains value. In the Consumer Financial Protection Bureau's own example, the agreement cost less only if the home lost at least 5% of its value. A HELOC has its own costs: the rate is usually variable, the payment usually rises after the draw period, and your home secures the line. An agreement can make sense when a monthly payment truly does not fit and you have a clear plan to settle it before the term ends.

Your Numbers, Not an Average

See What a HELOC Would Look Like on Your Home

Before you give up a share of your home's future value, find out what a line of credit would cost and whether the payment fits. A loan expert checks your equity, your first mortgage and your budget, and tells you plainly if a HELOC is not the right answer either.

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Plain English

How Each One Works

A HELOC

A home equity line of credit lets you borrow against your home as you need the money, up to a limit, during a draw period that is often 10 years. You pay interest only on what you have drawn, usually at a variable rate tied to the prime rate. When the draw period ends, the payment includes principal and usually rises. It sits behind your first mortgage as a second lien, and the underwriter qualifies you on credit, income and equity.

A home equity agreement

A home equity agreement company pays you a lump sum today. In return it gets a share of your home's value, set as a multiple of what it paid you. In the CFPB's example, a homeowner received $50,000, or 10% of a $500,000 home's value, and gave up a 20% share, twice what was paid out. Four terms decide what you will owe:

The share. The percentage of the home's value, or of its growth, that the company receives at settlement.
The starting value. Some agreements set the home's starting value below its appraised value. The discount raises what you owe in every scenario, even if prices stay flat.
The cap. A limit on the company's return, often about 18% to 20% a year. It only matters if prices rise very fast: in the CFPB example, even 8% yearly growth stayed under the cap.
The triggers. Settlement comes due when you sell, when the term ends, or earlier if you miss property taxes or insurance, default on your first mortgage, or the owner dies.

The agreement is recorded against the home, so it has to be settled or approved before you sell or refinance.

By the Numbers

Home Equity Agreements in Six Numbers

$0 a month

No monthly payment on the agreement. The whole settlement is due at once.

3% to 5%

Typical processing fees, taken out of the cash you receive, plus third party costs such as the appraisal.

10 to 30 years

Typical terms. If you have not sold by the end, you need cash or a new loan to settle.

About 18% to 20%

Typical yearly cap on the company's return. It only matters if prices rise very fast; in the CFPB example it never applied, even at 8% a year.

All or nothing

Early payoff is generally in full only. A HELOC can be paid down in any amount.

$150

Georgia intangible recording tax on a $50,000 HELOC, charged on the full line whether you draw it or not.

Sources: Consumer Financial Protection Bureau, Issue Spotlight: Home Equity Contracts: Market Overview (January 2025), for fees, terms, caps and payoff. Georgia Department of Revenue Rule 560-11-8 for the tax.

Side by Side

HELOC vs Home Equity Agreement in Georgia, Line by Line

Same home, same equity, very different bill at the end.

Comparison of a HELOC and a home equity agreement for Georgia homeowners
Criteria	HELOC	Home Equity Agreement
What it is	A line of credit secured by your home	Cash now for a share of your home's future value
Monthly payment	Yes, during the draw period and the repayment period	None
Cost on $50,000 over 10 years, CFPB example	$95,000 total: $45,000 interest plus the $50,000 balance	$94,074 to $215,892 to settle, depending on home prices
If your home value rises	Your balance does not change	What you owe rises with it, up to the cap
If your home value falls	You still owe what you borrowed	You generally owe less
Rate risk	Usually a variable rate, so the payment can change	No interest rate
Paying it off	Any amount, any time	Generally in full only, in one payment
Qualifying	Credit, income and equity reviewed by the underwriter	Often lower credit scores and a lighter income review
Selling or refinancing later	Paid off from the proceeds like any second lien	Recorded against the home and settled at sale or refinance
HELOC terms vary by program and are subject to underwriting approval. Agreement terms vary by company. Get every fee, cap and trigger in writing before you choose.

On a phone, scroll sideways to see both columns.

Worked Example

The Same $50,000, Ten Years Later

The CFPB modeled a homeowner with a $500,000 home who needs $50,000. With a HELOC at a 9% interest rate and interest only payments, she pays $375 a month for 10 years, or $45,000 in interest, and still owes the $50,000. That is $95,000 in total. With a home equity agreement she pays nothing each month and gives the company a 20% share of the home's value, with a 20% yearly cap. Here is what she owes the company in Year 10:

What home prices do	Home value in Year 10	Agreement settlement
Rise 8% a year	$1,079,462	$215,892
Rise 6% a year	$895,424	$179,085
Stay flat	$500,000	$100,000
Drop 30%, then rise 3% a year	$470,371	$94,074

Illustration only, not a quote, an offer or an approval. Figures come from the CFPB's January 2025 example: a $50,000 HELOC at a 9% interest rate, interest only for the 10 year draw period, after which the payment rises to about $450 a month on a 20 year repayment; and a $50,000 home equity contract on a $500,000 home with a 20% share and a 20% annual cap. HELOC rates are variable and can change, and actual rates, fees and terms vary. The flat row and the home values are our arithmetic on the CFPB's stated assumptions. We use $94,074 for the crash scenario because it matches the CFPB's stated range and break even point; the CFPB's table prints $81,149, which matches five years of 3% growth from $350,000, not ten. The 9% rate is the CFPB's hypothetical, not a UHome rate or offer; it does not include fees, and a variable rate HELOC carries a maximum rate set in each agreement. These totals do not adjust for timing: the HELOC interest is paid monthly over 10 years, while the agreement is paid once at the end. Fees are not included on either side: HELOC closing costs are left out, and in the CFPB example the homeowner's cash was also reduced by $6,000 in fees.

What the example shows. The agreement only beat the HELOC when the home ended the 10 years worth $475,000 or less, a 5% loss. In the strongest growth case the homeowner paid more than twice what the HELOC cost. The no payment feature is real, but it is paid for at the end.

In Georgia, the HELOC side also carries a one time intangible recording tax of $150 on a $50,000 line. That is small next to the gap between the two columns.

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Honest Answers

When Each One Fits

A HELOC usually fits when

You can carry a monthly payment, including the higher payment after the draw period.
You expect your home to hold or gain value.
You want to keep all of your future appreciation.

An agreement may fit when

A monthly payment truly does not work right now.
You have a clear plan to sell or refinance within the term.
You understand the settlement is one large payment that can force a sale if you cannot cover it.

Neither may fit when

The equity after your first mortgage is thin.
The cash would cover spending that will repeat.
Your first mortgage rate is higher than today's rates, which puts a cash out refinance on the list.

Before You Sign

Five Questions to Ask Any Home Equity Agreement Company

What starting value are you using, and how does it compare with the appraisal? A discount to the starting value raises what you owe in every scenario.
What will I owe in Year 3, Year 5 and Year 10 if prices rise 3%, 6% or 8% a year? Ask for the table in writing, with the cap applied.
What fees come out of my cash, and what costs come due at settlement? Include appraisal, title, recording and any fee to calculate the payoff.
What triggers early settlement, and what happens if I cannot pay it? Missed taxes or insurance and a default on the first mortgage are common triggers.
Can I pay part of it off, refinance or rent the home without your consent? Many contracts restrict at least one of these.

Ask the same kind of questions about any HELOC: the maximum rate, the payment after the draw period ends, and every fee. Then compare the two answers side by side.

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Where the Law Stands

Is a Home Equity Agreement a Loan? Courts Are Still Deciding

The companies structure these agreements as an option to buy part of your home, not as a loan, which is why they carry no interest rate and fewer of the federal disclosures a HELOC requires. That position is being tested.

Federal. The CFPB's January 2025 report laid out the costs and risks of home equity contracts but did not decide whether they count as mortgage loans.
Washington. In August 2025 a federal appeals court found one company's agreement met Washington's definition of a reverse mortgage.
Massachusetts. In August 2025 a state court allowed the Attorney General's lawsuit to go forward. The suit claims one company's product is an illegal reverse mortgage sold with deceptive marketing.
New state rules. Connecticut added disclosure rules effective October 1, 2025. Maine treats these products as consumer loans as of April 2026. Illinois adopted rules effective June 1, 2026.
Georgia. As of October 2026 we found no Georgia statute, regulation or court decision written for home equity agreements.

Whatever the label, the agreement is a claim recorded against your home that has to be paid. Weigh it with the same care as any debt secured by the place you live.

Georgia Only

What Changes in Georgia

On a HELOC

Intangible recording tax on the full line. $1.50 per $500, about 0.3%, charged on the total line amount whether you draw it or not: $150 on a $50,000 line, $300 on a $100,000 line. Later draws within the line owe nothing more.
An attorney closing. Georgia requires a licensed attorney to handle the closing when a security deed is signed, and the security deed is then recorded with the county.
Three business days to cancel. On a primary residence, federal law generally gives you until midnight of the third business day after closing to cancel, and no money is released before then.

On a home equity agreement

The tax is not addressed. Georgia's intangible tax rules are written for notes secured by real estate and do not mention these agreements. Ask the company in writing which Georgia taxes and recording fees it will charge.
Ask who closes it. Ask whether a Georgia attorney handles the signing and recording, and get a copy of everything recorded against your home.
No Georgia specific protections yet. With no Georgia law written for these products, the contract itself is your main protection. Read the cap, the starting value and the triggers twice.

Next Step

Compare a Real HELOC Before You Decide

We are a mortgage broker, so we can show you HELOC numbers from more than one source side by side, and we will tell you plainly when a HELOC is not the right fit. If an agreement is still the better answer for you after that, you will know why.

Questions, Answered

HELOC vs Home Equity Agreement Questions

What is a home equity agreement?

A home equity agreement, also called an HEA, a home equity investment or a home equity contract, gives you cash today in exchange for a share of your home's future value. It is not set up as a loan: there is no interest rate and no monthly payment. Instead you repay the company in one lump sum when you sell, refinance or reach the end of the term, and the amount grows with your home's value up to a cap.

Is a HELOC or a home equity agreement cheaper?

In most cases a HELOC costs less. In the Consumer Financial Protection Bureau's January 2025 example, a $50,000 HELOC with interest only payments cost about $95,000 over 10 years, while a $50,000 home equity contract cost $94,074 to $215,892 to settle in Year 10. The CFPB found the contract was cheaper only if the home lost at least 5% of its value over those 10 years.

Does a home equity agreement have a monthly payment?

No. That is its main appeal. Nothing is due each month, but the full settlement is due as one payment at the end, and in the CFPB's example that payment ran from about $94,000 to about $216,000 on $50,000 received. You still have to keep up your first mortgage, property taxes and insurance, because falling behind on any of them can trigger early settlement.

What happens to a home equity agreement if my home loses value?

You generally owe less, because the company's share is a percentage of the home's value. That is the one case where the CFPB found an agreement could cost less than a HELOC. Read the starting value carefully: some agreements set it below the appraised value, which raises what you owe even if prices stay flat or fall.

When do I have to pay back a home equity agreement?

When you sell the home, when the term ends, or when another trigger in the contract happens. Terms are usually 10 to 30 years. Common triggers include missing property taxes or insurance, defaulting on your first mortgage, and the death of the owner. If you have not sold by the end of the term, you need cash or a new loan to pay it off.

Can I pay off a home equity agreement early?

Usually yes, but generally only in full, not a little at a time. The early payoff amount is based on the home's value at that point, often set by a new appraisal, and is still subject to the contract's cap. A HELOC, by contrast, can be paid down in any amount whenever you like.

Is a home equity agreement a loan?

The companies say no, and Georgia has no law written for these agreements as of October 2026. Courts and regulators elsewhere have started to disagree: a federal appeals court found one company's agreement met Washington's definition of a reverse mortgage in 2025, and states including Connecticut, Maine and Illinois have adopted rules for these products. Treat it with the same care as any debt secured by your home.

Will a home equity agreement affect refinancing or selling?

Yes. The agreement is recorded against your home, so it shows up on title and has to be settled or approved when you sell or refinance. Contracts can also limit new borrowing against the home, or renting it out, without the company's consent. Ask for those limits in writing before you sign.

Is a home equity agreement easier to qualify for than a HELOC?

Often. Many programs accept lower credit scores and look less at income than a HELOC underwriter does, because the company is betting on the home rather than on your monthly budget. The trade off is the share of your home's value you give up. If you can carry a monthly payment, compare a HELOC first.

Is a Georgia HELOC taxed on the full line or only on what I draw?

On the full line. Georgia's intangible recording tax is $1.50 per $500, about 0.3%, charged on the total amount of the line whether or not you draw it. A $50,000 line owes $150 at closing and a $100,000 line owes $300, and later draws within the line owe nothing more. Georgia's tax rules do not mention home equity agreements, so ask the company in writing what Georgia taxes and recording fees it will charge.

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Sources and Editorial Review

Georgia and federal rules cited on this page: O.C.G.A. 48-6-61; Georgia Department of Revenue Rules 560-11-8-.02, .03 and .13; Regulation Z, 12 CFR 1026.15 and 1026.40. Washington ruling: United States Court of Appeals for the Ninth Circuit, August 7, 2025 (unpublished).

Reviewed by Coby Pegues, NMLS 2556341. October 2026.

Ready When You Are

Know Your HELOC Numbers First

Tell us what the money is for and when you need it. We show you what a HELOC would cost on your home, side by side with your other options, before you decide anything.

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Disclosures

General mortgage disclosure

This page is for educational purposes and is not a commitment to lend, an offer of credit, or an approval. Program requirements may vary. Eligibility depends on the complete borrower profile and is subject to underwriting approval. Additional requirements may apply. Examples are illustrations only.

Home equity disclosure

A HELOC is secured by your property. Failure to meet the obligations of the loan can put the property at risk. A HELOC rate is generally variable and can change; the payment can rise when rates move and when the draw period ends. Closing costs or fees may apply. UHome Mortgage does not offer home equity agreements; they are described here for comparison only, and their terms are set by the companies that offer them. Tax treatment depends on the borrower's situation; consult a qualified tax professional. Terms, availability, and loan amounts are subject to program requirements and underwriting approval and may change without notice.

Licensing information

Coby Pegues, NMLS 2556341 · UHome Mortgage LLC, Company NMLS 2559453

Licensed in Georgia, Alabama, and Texas.

Equal Housing Opportunity

Equal Housing Opportunity.