HEI Term-End Strategy: Selling, Refinancing, or Investor Buy Out?

A home equity investment (HEI) doesn’t end the same way a mortgage does. There’s no gradual amortization to zero, or a final payment that closes out the account.

When an HEI term ends, homeowners need to decide how to settle the investor’s share of their home. This article walks through the main options and the trade-offs that come with each.

In this article (Skip to...)

• How HEI term endings work
• HEI term-end options
• Common HEI mistakes
• The bottom line

How HEI term endings actually work

An HEI gives an investor the right to a percentage of your home’s future value in exchange for upfront cash.

There are no monthly payments, and there’s no interest rate in the traditional sense. Instead, the investor gets paid when a triggering event occurs. Those triggers usually include selling the home, reaching the end of the agreed term, or buying out the investor earlier.

When the term ends, the homeowners must decide how to resolve the investor’s equity share. There are generally three paths homeowners can choose from, and each resolves the problem in a different way.

Selling the home

Selling is the most straightforward way to settle an HEI. The home is converted to cash, the investor receives their share from the proceeds, and the remaining equity belongs to the homeowner. But that simplicity does come with certain trade-offs.

First, you’re giving up your home, even if you would prefer to stay. The timing also matters since market conditions can significantly affect how much equity remains after the investor is paid. And transaction costs, like agent commissions, closing fees, and moving expenses, can significantly reduce your net proceeds.

Refinancing

Refinancing resolves an HEI by borrowing against the home to pay out the investor. Equity becomes loan proceeds, and the homeowner replaces a shared appreciation obligation with traditional debt. This option allows homeowners to stay in the property and avoid selling, but it introduces a different set of risks and responsibilities:

Refinancing often appeals to homeowners who value predictability and control. Once the investor is paid, future appreciation belongs entirely to the homeowner. But you will need good credit, sufficient income, and an acceptable loan-to-value (LTV) ratio to qualify. And in higher-rate environments, refinancing can look less attractive even when home values are strong.

Buying out the investor

A buyout keeps the home and avoids new debt, but it requires liquidity from elsewhere. The homeowner pays the investor directly based on the home’s current value and agreed-upon share. This path allows you to avoid interest and preserves ownership, but it typically requires access to cash savings or proceeds from other asset sales.

The main advantage of this strategy is control since there’s no sale, no lender, and no ongoing obligation tied to the home. But tying up large amounts of liquid capital in a single asset can reduce financial flexibility, especially if unexpected expenses arise later.

Common mistakes at the end of an HEI term

Several missteps tend to make HEI exits more stressful than necessary:

The bottom line

When an HEI term ends, homeowners must decide how to close out the HEI provider’s share of their home. Selling, refinancing, or buying out the investor all accomplish that goal, but each option affects cash flow, housing plans, and long-term flexibility in different ways.

That decision is easier, and often less costly, when it’s made with time to plan. Reviewing your options early gives you room to compare outcomes, prepare for refinancing if needed, and align the exit with your broader financial goals.

The best approach is the one that fits how you plan to use your home and manage your equity going forward. If you’re ready to move forward, talk to your lender today.