Steadworth's Home Wealth Share program offers flexibility for homeowners who may need to sell or refinance their home before the end of their contract term. However, it's important to understand that selling or refinancing within the first five years of the agreement may result in adjustments to your Wealth Share percentage.
Why are there adjustments?
Steadworth incurs upfront costs when investing in your home through the Home Wealth Share program. These costs include underwriting, fees, and other expenses associated with setting up the agreement. A longer investment period allows for greater potential appreciation in the home's value, which helps Steadworth offset these upfront costs. Therefore, when a homeowner sells or refinances early, Steadworth may adjust the Wealth Share percentages to account for the shorter investment period and ensure a fair return on its investment.
Breakdown of Wealth Share Adjustments
The specific adjustment to your Wealth Share percentage depends on the timing of the sale or refinance within the first five years:
Year 1: If you sell or refinance within the first year of the agreement, your Wealth Share percentage will be reduced by 20%.
Year 2: If you sell or refinance between months 13 and 24 of the agreement, your Wealth Share percentage will be reduced by 17.5%.
Year 3: If you sell or refinance between months 25 and 36 of the agreement, your Wealth Share percentage will be reduced by 15%.
Year 4: If you sell or refinance between months 37 and 48 of the agreement, your Wealth Share percentage will be reduced by 10%.
Year 5: If you sell or refinance between months 49 and 60 of the agreement, your Wealth Share percentage will be reduced by 5%.
Example
Suppose you entered into a 10/10 Home Wealth Share Plan with Steadworth, which initially gives you a 60% Wealth Share. If you sell your home after 3 years, your Wealth Share percentage would be reduced by 15%, resulting in a revised Wealth Share of 45%. This means that you would receive 45% of the home's appreciation, while Steadworth would receive 55%.
It's important to note that these adjustments apply retroactively to the Effective Date of the agreement, regardless of when the sale or refinance occurs within the first five years.
Considerations
If you are considering selling or refinancing your home early, it's crucial to factor in these potential Wealth Share adjustments when calculating your expected proceeds. Carefully review the terms of your Home Wealth Share Agreement and consult with Steadworth's team to understand the specific implications for your situation.
By understanding the Wealth Share adjustments associated with early sale or refinance, you can make informed decisions and plan accordingly to ensure your financial goals are met.