Patch Homes Home Equity Loans Review

HOW IS PATCH HOMES RATED?

Breakdown

Overall Rating: 8.2 / 10 (Excellent)

Patch Homes has an innovative solution for house-rich and cash-poor homeowners who are looking to tap into their home equity, at very low cost to themselves. 

Technically not a home equity loan or a cash-out refinance, their debt instrument relies on the assumption that at the end of the loan term, the property will have risen in value. 

Patch Homes received high marks on the “loans” factor because of its innovative system grants eligible borrowers the ability to tap into their home’s equity without having to resort to high-interest rates or monthly payments for ten years.

The company also offers a fully online quote process.

Patch Homes also scored well on the “customer experience” factor thanks to its user-friendly and highly educational website. Because of Patch Home’s unique approach to equity loans, the website seems to have been designed to make it as easy as possible for consumers to understand exactly what the company provides and how they provide it.

There’s a short video (less than two minutes long) on the home page that does a great job of summarizing Patch Home’s methods.

Support resources like this video are readily available on the company’s website in the form of helpful articles, a blog, how-to guides (including credit-related subjects) and comparison guides like Patch Homes vs HELOC and Patch Homes vs Reverse Mortgages.

While not for everyone, Patch Homes’ offering can be an excellent solution for people with a strong credit history and in need of immediate cash.

PATCH HOMES LOANS

Loans - 8.4 / 10

Patch Homes offers a home equity financing solution that is completely different from anything else on the market. 

Essentially, they allow homeowners to extract equity at 0 % interest, with no monthly repayments for the ten-year loan term. 

At the end of the term, Patch Homes verifies the appreciation or depreciation of the home's value, and the loan becomes due.

How does this differ from a regular Home Equity Loan or Home Equity Line of Credit (HELOC)?

A traditional home equity loan lets borrowers use the equity they’ve built up in their homes as collateral for funds borrowed. These types of loans—which are often referred to as second mortgages—come with added interests and monthly payments and can be costly for the borrower.

A HELOC, on the other hand, is essentially a loan that allows consumers to use the equity they’ve built up on in their homes as a line of credit, from which they can draw as much and as often as they want from a predetermined max amount.

Borrowers can use this line of credit until they max out the equity limit or the predetermined time limit is reached. HELOCs also charge added interest on the loans.

Patch Homes’ loans differs from HELOCs and home equity loans because it doesn’t charge interest or monthly payments. Instead, the company agrees to share part of the future appreciation or depreciation of your home’s value.

This means that borrowers pay the company when they either decide to sell their home, buy the property out via a cash-out refinance, or at the term’s end of ten years. This is how the company is able to make a profit without charging high-interest rates or monthly payments.

This means the company is relying on and hoping for the future increase of all of its borrowers’ homes value to generate a return for the company’s loan.

You might be wondering what you can use the funds for, and if there are any limits or specifications as to what you can do with the funds. The answer is no. But, although Patch Homes lets consumers use their funds for whatever they want, the company stated that most consumers use them to pay off or consolidate existing loans, carry out home improvement projects like kitchen and bathroom upgrades, pay for medical and hospital bills, pay highly expensive items or life events like weddings, and finally, to make new investments.

PATCH HOMES QUALIFICATIONS

Qualifications - 8 / 10

Patch Homes only lends to borrowers with strong financial profiles and good to excellent credit.
Potential borrowers must have a loan-to-value ratio of less than 75% on their home and a FICO credit score of at least 630.

Additionally, the property to be financed cannot be used for commercial purposes, and cannot be subject to foreclosure or bankruptcy proceedings.

The company does claim to look beyond credit scores, using different data points to analyze your financial profile, and your property, in order to give you the best deal possible.

PATCH HOMES CUSTOMER EXPERIENCE

Consumer Experience - 8.2 / 10

Besides offering full online quotes, Patch Homes’ website also provides comprehensive information to better educate its customers about its products, an essential feature given its radically innovative debt instrument.

Watching the informative video is a great way to start, as it gives consumers a short explanation of the company’s process, its goals, and how it makes money.

Other great resources offered include a Patch Homes vs HELOC explanation, guides on how to pay off credit cards and personal loans, a Patch Homes vs Bridge Loan comparison and Patch Homes vs Reverse Mortgage comparison, and an FAQ section.

The website is also home to a blog with helpful articles covering education, home finance, news, and success stories, all written by industry professionals.

There are no hidden fees, although there are costs associated with the loan, such as a servicing fee, title and escrow fees, and an appraisal fee.

PATCH HOMES REPUTATION

Reputation - 8 / 10

Founded in 2016, Patch Homes is a relative newcomer to the home lending industry, yet it has already been featured in the Wall Street Journal, Fortune, The Washington Post, and National Mortgage News. 

Also, the company’s founders are industry veterans with more than twenty years of combined experience. Patch Homes is accredited by the Better Business Bureau and boasts an “A” rating on the review site.

See our 10 Best Home Equity Loans of 2019 to compare more companies.

ADDITIONAL DETAILS