HELOC vs. HEI?

What Homeowners Need to Know Before Unlocking Their Equity?

As homeowners build equity, it’s natural to consider how to tap into that value—especially with rising living costs, unexpected expenses, or dreams of investing in something new. Two popular options today are the Home Equity Line of Credit (HELOC) and the Home Equity Investment (HEI).

But while both can provide access to cash, the way they work—and what they mean for your future—are very different.

At Zumot Realty, our mission is to help you make educated, confident decisions. Let’s break it down.

What Is a HELOC?

A HELOC is like a credit card tied to your home. You’re approved for a line of credit based on the equity you’ve built, and you can borrow from it as needed—often for 10 years, with a repayment period after that.

Pros:

• You keep full ownership of your home.

• Interest is only paid on what you borrow.

• Can be great for home improvements or short-term needs.

Cons:

• Variable interest rates = fluctuating payments.

• You must qualify based on credit and income.

• It’s a loan—so it must be repaid, or you risk foreclosure.

What Is an HEI?

A Home Equity Investment (HEI) is not a loan. Instead, it’s a financial partner investing in a portion of your home's future value. You get a lump sum now in exchange for a share of your home’s appreciation when you sell (or after a set time period).

Pros:

• No monthly payments.

• No interest charges.

• Easier to qualify for than traditional loans.

Cons:

• You’re giving up a portion of your home’s future gain.

• If your home value rises significantly, the cost of the HEI could be higher than a loan.

• Long-term commitment—some require repayment even if you don’t sell.

Which One Makes Sense for You?

The answer? It depends on your priorities.

• Want to preserve 100% of your equity and can manage monthly payments? A HELOC may be the better choice.

• Need cash but can’t or don’t want to take on more debt? An HEI could be a smart alternative—but read the fine print.

Your home is more than a number on paper. It’s your future, your family, your peace of mind.

Before making any decision about your equity, let’s talk. We’ll connect you with trusted professionals that can guide you through the process.