The Multiplier is a key component of Steadworth's Home Wealth Share Plans, as it directly impacts your share of the home's future appreciation and the potential Wealth Share Proceeds you may receive. Understanding how the Multiplier works is essential for making informed decisions about your plan and maximizing your potential returns.
What is the Multiplier?
The Multiplier is a predetermined number that is used to calculate Steadworth's share of the appreciation in your home's value. Each Home Wealth Share Plan has a different Multiplier, which is determined by the combination of the Contract Term and Down Payment Split you choose.
How the Multiplier Works
Steadworth's Wealth Share is calculated by multiplying the Multiplier by the Down Payment Split provided by Steadworth. For example, if you choose a plan with a 10% Down Payment Split from Steadworth and a Multiplier of 4x, Steadworth's Wealth Share would be 40% of the future appreciation in your home's value. Your Wealth Share would be the remaining 60%.
Multiplier Variations
The Multiplier varies depending on the chosen plan. Generally, plans with longer Contract Terms and lower Down Payment Splits have higher Multipliers. This reflects the increased investment made by Steadworth and the longer timeframe for potential appreciation.
Wealth Share Proceeds Calculation and Distribution
When the Home Wealth Share agreement comes to an end, the Wealth Share Proceeds are calculated and distributed based on the triggering event:
1. Sale of the Home:
Appreciation Calculation: The outstanding mortgage balance is subtracted from the sale price of the home to determine the total appreciation.
Proceeds Distribution: The total appreciation is then shared between you and Steadworth according to your respective Wealth Share percentages as outlined in your Plan Agreement.
Example:
Assuming you purchased a home for $500,000 with a 10% Down Payment Split from Steadworth and chose a 10-year plan with a Multiplier of 4x:
You sell the home for $700,000 after 10 years.
Your outstanding mortgage balance is $300,000.
The total appreciation is $400,000 ($700,000 - $300,000).
Steadworth's Wealth Share is 40% of the appreciation, which is $160,000.
Your Wealth Share is 60% of the appreciation, which is $240,000.
2. Refinance of the Mortgage:
Appreciation Calculation: The original purchase price and any outstanding mortgage balance are subtracted from the appraised value of the home at the time of refinancing to determine the total appreciation.
Proceeds Distribution: The total appreciation is then shared between you and Steadworth according to your respective Wealth Share percentages as outlined in your Plan Agreement.
Example:
Using the same assumptions as above:
You refinance the home after 10 years, and the appraised value is $700,000.
Your outstanding mortgage balance is $300,000.
The total appreciation is $200,000 ($700,000 - $500,000 - $300,000).
Steadworth's Wealth Share is 40% of the appreciation, which is $80,000.
Your Wealth Share is 60% of the appreciation, which is $120,000.
These examples demonstrate how the Multiplier directly impacts the distribution of the Wealth Share Proceeds and how the calculation differs between sale and refinance scenarios. By understanding the Multiplier and its implications, you can choose the Home Wealth Share Plan that offers the most potential benefit for your individual circumstances and goals.