If you have a lot of equity in your home and want to get at the money, you generally have two options: sell the house or take out a loan. But now, there's a new option called "the REX agreement." It promises immediate cash with no loan, no interest and no monthly payments.

The REX agreement is the brainchild of an equity investment company in San Francisco. It's a complicated deal that involves you giving them a share in the future value of your home, in exchange for a cash payment of part of your equity right now.

For thousands of local consumers, home is where the value is.

Bob and Emily Williams purchased their home in 1979 and their mortgage has been paid in full. They're sitting on pure equity.

"At my bank, I could write a check for $50,000 and get it today," said Bob.

But that would be a loan, and Bob doesn't want to tie up his house with a new debt.

The people behind REX Agreement say they have a better idea. They're blanketing the Seattle market with newspaper and radio ads. The message: "Why should you make monthly payments for the privilege of unlocking your own equity? Simply stated, you shouldn't, and now you don't have to."

"A REX agreement is pure equity," said Thomas Sponhotlz, CEO of Rex & Co.

Sponholtz says his investment partners are offering you the cash you want, say $75,000, in exchange for a share of the future equity in your home.

"You get that payment today, interest free, payment free, for as long as you want up to 50 years," he said.

To qualify for the agreement, you must have a stand-alone home that you live in. Second homes, condos and vacation property are not eligible.

You must have what Sponholtz calls a decent credit score and be financially responsible. The company does a credit check as a part of the application process.

And you need to have a minimum of 25 percent equity in your home.

Sponholtz says the typical customer is a baby-boomer.

"If you look at the potential pension crisis where the majority of baby boomers have 75 percent of their net worth tied up in their house, and have saved less than a hundred thousand for retirement. It's a very interesting way, if you're house-rich and retirement-poor, to transfer some of the wealth you accumulate in your house onto a safe and more secure retirement," Sponholtz said.

I asked him to give me an example of how based on a cash payment of $75,000 with a current home value of $500,000. Here's how it works:

- You get $75,000 cash up front.

- REX & Company gets the rights to 50 percent of the future change in your home's value.

- Later, when you sell or the contract expires, say the value is $700,000. That's a $200,000 appreciation.

- In this case, REX & Co. gets back the original $75,000 plus 50 percent of the appreciation, which equals $100,000, and brings the total total to $175,000.

"In contrast, if the house decreased in value by $200,000, we would also lose all that money we gave up front. You don't owe us anything," said Sponholtz.

The concept is to share in the risk both ways. If your home decreases in value and only sells for $400,000, that's a $100,000 depreciation.

REX gets back the original $75,000 minus $50,000 - 50 percent of the value change - for a total gain of $25,000. It all depends on what happens to the value of your home.

Other things you should know:

• The equity you take out determines the percentage of future equity you'll give up.
  
  
• You can ask for a percentage of your equity or for a specific dollar amount, and there can be room for negotiation.
  
  
• You can do an early buy-back, in which value change is determined by the appraised value of your home at the time you want to pay back the equity.
  
  
• The goal is for a long-term contract and there could be an exit fee if you get out before five years.
  
  
• The early exit fees can be as high as 25% of the cash advance.
  
  
• The total cost can end up being higher than if you took out an equity loan.
  
  
• You have no tax deduction as you would with a loan.
  
  
• You may also face extra fees if you do not deal directly with REX and Co. In some markets, the company authorizes outside representatives to handle the transaction.

It's complicated. It's very new, and it's not for everyone.

The REX Agreement is only offered in selected markets where real estate values are stable. The company analyzes the markets and does a lot of homework before deciding which states are likely to have the best investment potential and consumers should do the same thing.

Anyone considering the REX agreement should review the terms and conditions with legal and financial advisor before making an application or signing a contract to determine if it's really the right fit.

Remember, The REX agreement is a legal investment partnership tied directly to you home's value.

Sponholtz says response to its Seattle area marketing campaign has been very positive, with about 1,000 homeowners contacting the company on line or by phone to get more information. He predicts other companies will pop up offering similar equity-based partnership deals.

For more information:

Rex & Co.

Related articles:

A New Way to Tap Home Equity

Personal Finance Notebook: Slicing up home equity pie.

The Rex Agreement... Is It Worth It?