Refinancing Out of an HEI Agreement: How It Works (and What It Really Costs)

A Home Equity Investment (HEI) can feel like a relief when you first get it. You receive cash without taking on a monthly payment, and you don’t have to qualify the way you would for a traditional loan.

But later, many homeowners reach the same point: “I want out.”

Maybe your home value has increased, you’re planning to sell, or you simply don’t like the idea of sharing appreciation long-term. Whatever the reason, refinancing out of an HEI agreement is one of the most common ways homeowners try to exit.

It’s also one of the most misunderstood.

Refinancing can help you pay off the HEI, but it doesn’t make the HEI disappear for free. It replaces the HEI obligation with a new mortgage loan, and that means the total cost can be higher than people expect.

This guide explains how refinancing out of an HEI works, how the buyout amount is calculated, what you need to qualify, and how to think about timing.

• What it means to “refinance out” of an HEI
• Why homeowners refinance out of HEIs
• How the HEI buyout amount is calculated
• Example: What refinancing out of an HEI can cost
• What you need to qualify to refinance out
• The hidden costs people forget
• When refinancing out of an HEI is smart
• When refinancing out of an HEI is not smart (or possible)
• The bottom line
• FAQs: Refinancing Out of an HEI Agreement

What it means to “refinance out” of an HEI

Refinancing out of an HEI means you’re using a new mortgage (or refinance loan) to pay the HEI investor the amount owed under the agreement.

In other words, you are buying the investor out.

This is an important distinction because HEIs typically don’t have a payoff balance the way a loan does. The amount you owe is usually based on your home’s value at settlement, which means the cost can change over time.

What experts are saying

Michael Gifford, CEO of Splitero

“Most homeowners now have 50% or more equity in their home, but rising rates make traditional borrowing unattractive or impossible.”

Why homeowners refinance out of HEIs

Most homeowners don’t refinance out of an HEI for just one reason. It’s usually a mix of financial strategy, life timing, and a desire to regain control over the home’s upside.

That last point matters more than people admit. HEIs often feel fine at the beginning, but emotionally frustrating once you realize how much of your home’s growth may be shared.

How the HEI buyout amount is calculated

The buyout amount is the part that surprises most homeowners, because it’s not calculated like a normal loan payoff.

The biggest variable is the home’s value at settlement. That value is usually determined through an appraisal or valuation method specified in the contract.

This is why refinancing out can feel unpredictable. If the value comes in higher than you expected, your buyout cost rises too.

Example: What refinancing out of an HEI can cost

Let’s walk through a simplified example, because this topic is hard to understand without numbers.

Assume:

• Home value at start: $400,000
• HEI investor share of appreciation: 25%
• Cash received from HEI: $60,000
• Home value at refinance: $520,000

The home’s appreciation is:

$520,000 − $400,000 = $120,000

The investor’s share of that appreciation is:

25% × $120,000 = $30,000

In this simplified scenario, you would owe the investor the amount needed to settle the agreement based on the contract’s structure, which commonly includes:

• the investor’s original investment amount
• plus their share of appreciation
• plus any contract-based fees

The exact payoff structure varies by provider, but the big takeaway is consistent: If your home value has increased, refinancing out can cost significantly more than the cash you originally received.

And that’s before refinance closing costs.

What you need to qualify to refinance out

Refinancing out of an HEI is not just a paperwork step. You still need to qualify for a new mortgage.

That means your refinance lender will evaluate the same fundamentals they would for any mortgage:

• credit score
• income documentation
• debt-to-income ratio (DTI)
• your home’s appraised value
• how much equity you have after paying off the HEI

This is where many homeowners get stuck. Even if you want out, you may not qualify for the refinance needed to buy out the investor, especially if your DTI is tight or your income documentation is complicated.

The hidden costs people forget

One reason refinancing out of an HEI feels so expensive is that homeowners often focus only on the HEI settlement amount. But refinancing has its own costs too.

Depending on your loan and lender, you may also pay:

• refinance closing costs
• appraisal fees
• title and escrow costs
• recording fees and lender fees
• a new interest rate (which may be higher than your current mortgage)

In other words, refinancing out can create a “double cost” problem: you’re paying to settle the HEI and paying to originate a new mortgage.

That doesn’t mean it’s always a bad idea. It just means you want to evaluate the full cost, not only the HEI buyout.

When refinancing out of an HEI is smart

Refinancing out tends to make the most sense when the refinance improves your long-term financial position, not just your emotional comfort.

For many homeowners, the “early exit” factor is the most important. The longer you wait, the more potential appreciation you may end up sharing.

When refinancing out of an HEI is not smart (or possible)

Sometimes the math simply doesn’t work, even if you want out.

In these situations, waiting may be the only realistic option, even if you dislike the HEI structure.

The bottom line

Refinancing out of an HEI agreement is possible, but it’s not as simple as paying off a traditional loan. Your settlement amount is tied to your home’s value, which means the cost can rise over time.

If you can qualify for a refinance and the numbers work, buying out the HEI can protect your future appreciation. But because refinancing adds its own costs and may change your mortgage rate, it’s worth running the math carefully before you commit.

FAQs: Refinancing Out of an HEI Agreement