Have you heard of the REX agreement? REX & Co. make sure to emphasize that this is not a loan, but an agreement to share in the profit or loss on the equity gained in your home for money up front that is interest and payment free. Sounds nice, as everyone like money now while not having to pay until later. But is this going to take off, or will it assist in putting people further behind than they would otherwise be by limiting their current spending?
According to their web site, you are able to obtain 10-15% of the home's value, and you don't have to pay it back until you sell (or lose?) your home. Assuming you obtain a decent increase in value on your home, REX will take their original loan amount (pardon me, agreement amount) plus 50% of the increase in value. If you sell at a loss, they will write off half of that loss.
There is of course a lot more to consider here, but there are some serious questions that need to be answered to see if this will fly. For instance, if REX chooses the appraisal service for evaluating the value of your home, who's to say they won't seriously undervalue it? They mention an impartial 3rd party, but with the lawsuit being thrown at WAMUs appraisal practices, impartiality is a legitimate concern for any home owner.
Also, if you use your money from this agreement to improve your home, how exactly does REX seperate the investment you made and the appreciation in value from the debt you have incurred? Then what if you don't take care of your property to purposefully have it lose value? Do they have maintenance police to ensure you take care of your home? Can you take out a loan after this agreement? Or, if the value of your home is exactly the same as when you got the agreement at time of sale, you still have to pay back the borrowed amount (but the 1/2 of nothing you are off the hook for?). Where would this money possibly come from?
I could go on, but I think you can agree that this is a complex agreement that needs serious investigation prior to signing any paperwork.
I will definitely be keeping an eye on this over the next couple of years to see how this plays out for people. Anybody else want to weigh in on this?
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