The new offer will provide up to 15% of a home’s purchase price to be paid for a down payment, helping buyers qualify for more expensive homes and avoid private mortgage insurance.
Shared-equity platform Point says it will use $115 million in Series C funding to expand its product line to include a down payment product for homebuyers and to enter new markets at beyond its current footprint in 16 states.
Founded in 2015, Palo Alto, California’s flagship Home Equity Investment (HEI) product allows homeowners to leverage up to $500,000 in home equity by selling a share of their home’s future price appreciation to investors, paying a processing fee of 3-5%. , plus the cost of an independent appraisal.
A new product for homebuyers, Seed, will provide up to 15% of a home’s purchase price for a down payment, helping buyers qualify for more expensive homes and avoid private mortgage insurance .
With either product, homeowners can redeem their equity within 30 years without paying a prepayment penalty, usually through a refinance, home loan, or sale. The company also offers a home equity line of credit (HELOC) in California.
The Series C fundraising, which brings total equity funding to date to over $170 million, was led by WestCap, with participation from existing investors Andreessen Horowitz, Ribbit Capital, Redwood Trust, Atalaya Capital Management and DAG Ventures. New investors included Deer Park Road Management, The Palisades Group and Alpaca VC.
“We have created strong momentum at Point and welcome this vote of confidence from leading equity investors in our continued success,” Point co-founder and CEO Eddie Lim said in a statement. “We expect this additional capital to accelerate our growth as we help cash-strapped homeowners and homebuyers establish financial stability and realize their financial dreams.”
WestCap is also an investor in single-family residential rental asset manager Avenue One, sustainable home improvement platform GoodLeap and short-term rental platform Sonder.
Point is currently available in Washington, DC and select markets in Arizona, California, Colorado, Florida, Illinois, Maryland, Massachusetts, Michigan, Minnesota, New Jersey, New York, North Carolina, Oregon, Pennsylvania, Virginia, and Washington.
With its new funding, the company plans to expand into a total of 28 markets over the next year.
Last week, equity startup HomePace announced that it had secured $7 million in Series A funding led by homebuilder Lennar’s venture capital arm, LENx, which will allow the company to launch a home buying solution to help buyers double their down payments.
Rising interest rates are expected to curb house price appreciation in the months and years to come. In an April 19 forecast, economists at Fannie Mae said they expected house price appreciation to slow from a record 19.8% in the first quarter of this year to 3.2% by the last three months of 2023.
That’s not necessarily a problem for stock companies, HomePace CIO Jeboah “Bo” Joerg told Inman.
“The general consensus is that cooling house prices are probably healthy for the market,” Joerg said. “If you’re in it for the long haul, it’s probably better to have a higher slow grind than for us to keep accelerating higher” until prices crash.
Homebuyers looking for help with making a down payment can also use tools provided by an Atlanta-based company, Down Payment Resource, which tracks programs offered by state and local housing finance authorities. other suppliers.
Down Payment Resource integrates data on program benefits and eligibility criteria with MLSs, lenders, agents, and home search sites like Zillow.
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