Quick answer
You get out of an HEI by paying the investor the settlement amount: the original investment plus the investor's share of your home's value or appreciation. You can do it by selling the home, refinancing (a cash-out refinance or HELOC), paying with savings, or at the end of the term. Most contracts allow early settlement; check for minimums or fees in the first few years. Our HEI program has no prepayment penalty.
How the payoff is calculated
At settlement the investor receives what the contract says: usually the original amount plus a share of appreciation, or a share of the home's total value, subject to any cap. The key number is your home's value on the settlement date.
- If you sell to an unrelated buyer, the sale price usually sets the value.
- If you refinance or buy out without selling, the provider typically orders an appraisal. Many contracts let you dispute it or get a second opinion.
- Improvements you made may be credited if the contract provides for it. Keep receipts and permits.
Ask for a written payoff estimate before you start. It tells you exactly what you're solving for.
Option 1: Sell the home
The simplest exit. The investor is paid from the sale proceeds at closing, just like your mortgage. There's nothing to qualify for. This is why HEIs fit people who already plan to sell within the term.
Option 2: Refinance
If you want to stay, you can replace the HEI with a loan:
- HELOC: keeps your first mortgage intact and pays off the investor. Best when your first-mortgage rate is low. See our HELOC programs.
- Cash-out refinance: replaces your first mortgage with a larger one that also pays off the investor. Best when your current rate is at or above today's rates. See cash-out refinance vs. HELOC.
- Home equity loan: a fixed payment on the payoff amount.
Refinancing means taking on a monthly payment, so you'll need to qualify on credit and income. If you're self-employed, a bank statement HELOC can make that easier.
Option 3: Buy out with cash
If you have savings, an inheritance, or a business payout, you can settle directly. Some providers also allow partial buyouts that reduce the investor's share. Ask whether yours does.
Option 4: The end of the term
When the term ends (often 10–30 years), you must settle. If you haven't planned, that can mean a rushed sale or refinance. Start preparing two to three years ahead: check your credit, get a payoff estimate, and compare refinance options while you have time.
Should you buy out early? An example
Five years ago you took $50,000 from an HEI on a $500,000 home for 25% of the appreciation. Your home is now worth $600,000 (about 3.7% a year).
- Payoff today: $50,000 + 25% of $100,000 = $75,000.
- If you wait five more years at the same pace, the home reaches about $720,000: $50,000 + 25% of $220,000 = $105,000.
- If you buy out now with a HELOC at an example 8%, interest-only: $6,000 a year, or $30,000 over five years, plus the $75,000 = $105,000.
At this growth rate it's roughly a wash. If you expect faster appreciation, buying out now saves money. If you expect slower growth, or you'd pay the HELOC down quickly, the math shifts accordingly. Buying out also takes on a monthly payment, so the real question is whether that payment fits your budget.
Illustration only; ignores fees, caps, and taxes. We'll run it with your contract's actual terms.
Special situations
Divorce
The HEI usually has to be settled if the home is sold or one spouse refinances to buy out the other. Build the payoff into the settlement agreement.
Death of the homeowner
The HEI still has to be settled, usually by the estate, from the home. Heirs can typically sell, refinance, or pay it off. Check the contract's timeline for settling after a death.
Home value dropped
Many contracts share the decline, so the payoff may be lower than you expect, which can make now a good time to buy out. Check for any minimum return in your contract.
Your exit checklist
- Read the settlement section of your contract: share, cap, minimums, improvement credits.
- Request a written payoff estimate.
- Get a rough home value from recent sales near you.
- Compare refinance options with a lender.
- Decide: settle now, wait, or plan a sale.
Compare an HEI and a HELOC for your home
Tell us how much you need. We'll show the HELOC payment and total cost next to the HEI settlement under flat, moderate, and strong appreciation.
FAQ
Can you pay off an HEI early?
Usually, yes. Most contracts allow early settlement at any time by selling, refinancing, or paying with savings. Some have a minimum return or fees in the first few years, so check your contract.
How is an HEI payoff calculated?
The payoff is typically the original investment plus the investor's share of your home's appreciation or total value on the settlement date, subject to any cap. If you're not selling, the value usually comes from an appraisal.
Can I use a HELOC to pay off an HEI?
Yes, if you qualify. A HELOC can pay off the investor while keeping your first mortgage in place. You'll take on a monthly payment, so compare the HELOC cost to the HEI's expected growth.
What happens at the end of an HEI term?
You must settle the investment, typically by selling, refinancing, or paying with cash. Start planning two to three years before the term ends so you're not forced into a rushed sale.
Can I do a partial HEI buyout?
Some providers allow partial buyouts that reduce the investor's share. Not all do, so ask your provider.
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Keep reading
What Is an HEI? The Complete Guide
How HEIs work, what they cost, and the 10-year math vs. a HELOC.
HEI Pros and Cons
Is a home equity investment a good idea?
HELOC Programs
Replace an HEI with a line that keeps your first mortgage.