The Contract Term is a crucial aspect of Steadworth's Home Wealth Share Plans, as it determines the duration of your agreement with the company. Understanding the Contract Term and its implications is essential for making informed decisions about your homeownership journey.
What is the Contract Term?
The Contract Term refers to the specific period of time during which your Home Wealth Share agreement with Steadworth is in effect. This term begins on the Effective Date of the agreement and ends on the specified expiration date. During this period, Steadworth holds a co-investment interest in your home and is entitled to a predetermined share of the appreciation in its value.
Available Contract Term Options
Steadworth offers two Contract Term options:
5-Year Term: This option provides a shorter agreement period, allowing you to potentially realize the benefits of homeownership and shared appreciation sooner.
10-Year Term: This option provides a longer agreement period, giving you more time to build equity and potentially benefit from greater appreciation in the value of your home.
Impact of the Contract Term
The Contract Term you choose has several implications:
Multiplier: The Multiplier is used to calculate Steadworth's share of the appreciation. This factor is higher for longer Contract Terms, reflecting the increased risk and potential return for Steadworth over a longer investment period or at a higher down payment contribution from Steadworth.
Wealth Share Proceeds: The Wealth Share Proceeds are the portion of the home's appreciation that is shared between you and Steadworth. The longer the Contract Term, the greater the potential for appreciation and, consequently, the larger the potential Wealth Share Proceeds for both parties.
Flexibility: A shorter Contract Term provides more flexibility if you anticipate selling or refinancing your home within a few years. However, a longer Contract Term may be beneficial if you plan to stay in the home for an extended period and want to maximize potential appreciation gains.
Extending the Contract Term
In some cases, you may have the option to extend the Contract Term of your Home Wealth Share Plan. This option is typically available for plans with an initial 5-year term and may involve an adjustment to the Wealth Share percentage. It is important to carefully review the terms of your agreement to understand your options and any implications of extending the Contract Term.
Choosing the Right Contract Term
The best Contract Term for you will depend on your individual circumstances and goals. Consider factors such as your financial situation, your expected length of stay in the home, and your risk tolerance. If you anticipate selling or refinancing within a few years, a shorter term may be preferable. If you plan to stay in the home for a longer period and want to maximize potential appreciation gains, a longer term may be more suitable.
By understanding the Contract Term and its implications, you can make informed decisions about your Home Wealth Share Plan and ensure that it aligns with your long-term homeownership goals.