If your home equity line has recently been frozen, beware of “quick-fix” alternatives, such as the Rex Agreement now being advertised.

Rex, Inc. is offering homeowners the chance to tap into their equity, despite the fact that their bank has reduced or canceled their lines.

Here’s what the company has to say:

“The REX Agreement, available in 13 states nationwide, allows homeowners to access their equity without ever incurring debt, interest or monthly payments. With the REX Agreement, homeowners can convert a portion of their home’s value into cash now in exchange for granting REX & Co. a portion of the future increase or decrease in the home’s value when they sell or decide to end the Agreement.

“Responsible homeowners have worked hard to build equity in their homes. Through no fault of their own, an increasing number of homeowners have suddenly discovered their HELOCs frozen and access to cash from their home equity denied,” said Tjarko Leifer, managing director at REX & Co. “The REX Agreement is a debt-free alternative that can replace the frozen HELOC and give homeowners a large, lump-sum cash advance to use anyway they wish without having to pay interest or make monthly payments.”

Keep in mind: the Rex Agreement is not a home equity line of credit. This is an equity sharing program, an entirely different beast.

Sure, homeowners don’t have to make monthly payments on the cash they’re given upfront. That’s because the company is going to take a percentage of the home’s increase in equity when the property sells. In essence, the company now owns a part of your home.

The only good part about this is that, if your home decreases in value, you may not have to pay back the money you took out. However, if you plan to hold on to a home for several years, chances are the value will increase.

See Also:

Shared Equity Loans

Is a HELOC Right for You?

Tags | Heloc, home equity line of credit, Rex Agreement