American families have $35.8 trillion in home equity, but accessing it is challenging. Home equity agreements (HEA) are gaining popularity as an alternative to HELOCs but come with risks. In 2024, 11,000 contracts worth $1.1 billion were signed, with the market estimated at $2-3 billion.

HEAs offer upfront cash for home equity but have unfavorable terms for homeowners. Complex agreements can lead to homeowners paying more than with a traditional HELOC. The market is expanding, but the high settlement growth rate can make HEAs costlier in the long run.

The appeal of easy cash without interest rates drives the demand for HEAs. However, the contracts can disadvantage homeowners due to unfavorable terms. CFPB notes that the settlement amount growth rate can be substantially higher than interest rates on most home-secured credit.

Read more at Yahoo Finance: No one’s talking about a dangerous new US housing trend. Why home equity agreements could trigger disaster for millions