Rex Agreements and EquityKey pioneered the market for alternatives to reverse mortgages and now a new player is on the scene – NestWorth. The Rex Agreement is nothing more than an agreement between the homeowner and Rex that when the homeowner sells the home, Rex gets a portion of the appreciation in property value. In return, Rex gives the homeowner an upfront fee.
NestWorth, on the other hand, gets a percentage of the entire value of the home at sale with the range being anywhere from 20-90%. NestWorth is essentially pre-buying the home. Rather than paying out a lump sum up front, they structure the payouts as monthly payments that vary based on the age of the homeowner and the amount being of equity being traded.
In the most aggressive case, where the homeowner is only keeping rights to 10% of the sale price (trading away 90%), a 72 year old homeowner with a $1M property would receive $3,125 per month.
So how does this compare to reverse mortgages? Apples and oranges. But one dimension you can compare is what percentage of the home’s equity is paid out to the homeowner.
A 72-year old can receive about 65% of their equity with a reverse mortgage. With the NestWorth product, it depends on how long the homeowner survives to receive payments. If they live for 10 years, they’ve received a present value of $294,629 or 29.5%. For 15 and 20 years the percentages are 39.5% and 47.4%, respectively.
Given that the average term to maturity of a reverse mortgage is only 7 years, using 20-year estimates for the NestWorth is probably aggressive. So, a reasonable answer is that the NestWorth provides access to about 30-40% equity.