Hometap Raises Another $60M for Tapping into Home Equity
Boston-based startup Hometap, which allows people to tap into their home equity without taking out a loan, finished another round of funding. That brings it to a total of $95 million in operating capital raised.
The latest round was led by American Family Ventures and included Bain Capital, Iconiq Capital, and G20 Ventures, among others. The company will put this new capital towards hiring new people, expanding its operations, and introducing additional services and financial products.
Currently, Hometap allows people to cash out their home equity through an investor, without taking out a loan. In return, the investor gets a share of the home’s future value. Hometap earns an agreed-upon percentage of the sale price once the homeowner sells the house or returns the investment.
Jeffrey Glass, CEO of Hometap, said: “We started this company not only because we thought it was a good business, but because we wanted to be part of something with a social mission.”
“There are so many people that are house rich and cash poor — and might have a capital need such as renovating a house or paying for college where, historically their only alternative is to further borrow on, or sell their house,” he added.
Hometap offers much-needed funds in a form that differs from traditional loans - the startup doesn’t require any monthly payments, nor does it charge interest throughout the 10-year term.
This is a significant modification compared to other home equity loans; with them, borrowers typically don’t know how much they owe until the moment they sell or settle. Unfortunately, home equity loans can end up being quite pricey.
On the other hand, with Hometap, people can use the money otherwise tied up in the property to pay down their debts or increase their FICO score. Glass also draws the parallel in another manner: Hometap is an investor, not a lender.
It seems that this model of “smart loan alternative” works. Without going into specifics, Glass said that 2021 was an excellent year for Hometap, as it made four times more than the previous one. The company also increased its number of employees to 140, doubling what it had last year, and nearly tripled its revenue in the same timeframe.
“We expect to more than double, or perhaps triple again, next year as well,” Glass said.
Hometap is currently available in 15 states, including Massachusetts, New York, and Florida.
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