About lender
Noah, formerly Patch Homes Inc., is an online brokerage firm that connects homeowners with investors who want to share their home value. This unique alternative to standard finance allows you to access the equity in your home without the burden of monthly payments.
The company issues no interest charges or monthly payments, and all they ask is that you repay them in ten years. It enables homeowners to access funds without being pressured by payments, which could be helpful if a borrower was suddenly laid off or faced a comparable loss of income.
Established in 2016, the company's head office is in San Francisco, California. It serves homeowners in California, Colorado, Massachusetts, New Jersey, New York, Oregon, Utah, Virginia, Washington, and Washington, D.C.
Pros and cons of Noah
Pros
You can get cash upfront for any purpose. Noah has no restrictions on how you spend your investment funds. Use it for home improvements, college tuition, or debt repayment.
Avoid making a monthly payment. You will not be required to make an additional monthly payment, as you would with a home equity loan or home equity line of credit (HELOC).
You could receive more than you pay back. Noah shares your successes and failures. If your house loses a substantial value before the end of your term, you may end up paying less than your initial investment.
With poor credit, you can qualify. A 580 credit score is all that is required to qualify for a home equity sharing arrangement. Many other types of borrowing necessitate a considerably higher credit score.
Cons
It could cost you far more than you would have spent on alternative types of financing. If the value of your home rises dramatically, you may end up repaying Noah much more than you got. It could be more than the interest you spent on a cash-out refinance, home equity loan, or HELOC.
It takes a significant amount of equity to get started. You will not be eligible for a Noah equity sharing arrangement unless you own at least 15% of your home.
There are several upfront costs. You'll need money to pay Noah's charge, as well as several other upfront services and transaction costs from third parties.
Terms and conditions
Unlike a loan, a Noah home equity sharing arrangement has no monthly payments. Instead, you'll give Noah a percentage of the future value of your home. You will have up to ten years to purchase Noah's position. You can buy out Noah's position in a variety of different ways, including the following:
Put the house up for sale. You would pay Noah's portion out of the revenues from your sales.
Refinance your existing mortgage loan. You can access the equity in your home through a cash-out refinance, receive a lump-sum cash payout, and then use that money to buy out Noah's portion of the business.
Utilize your savings or other available cash resources. You can also use money from your savings, a windfall (such as an inheritance), or any additional liquid funds you might have to pay Noah.
The best choice for you will be determined by several criteria, including your financial situation at the time of sale. If unsure, you should consult a financial professional to receive some guidance.
Even though Noah does not charge interest or require monthly payments, it is vital to understand that Noah does charge fees. Their servicing cost, which is essentially a loan origination fee, is $2,000 or 3% of the loan amount, whichever is greater. It includes loan processing and underwriting.
Funding a loan
The procedure for obtaining financing comprises five simple steps:
Get an estimate by providing your house address and a few other fundamental details;
Complete an application online and check your credit;
Schedule a house appraisal to evaluate the value;
Sign your documents;
Receive your funds.
To begin, you submit an estimate request by putting your property address into their web form. It will automatically fetch your house worth and ask basic questions like what you presently owe and your credit score. If you want to proceed, enter basic contact information and complete an online application. This procedure will be similar to applying for a mortgage, as it will necessitate a credit check and the uploading of appropriate income/asset data.
Following that, an appraiser will come to your home to provide an unbiased appraisal of its value. After you sign the closing documents with a notary, the money will be transferred within a few days. The process can be completed in as little as a week and a half, or 15 days.
