If you’re a homeowner looking for an alternative way to access your home’s equity without taking on more debt, Unison HomeOwner might be the solution. In this review, we’ll dive into how Unison’s innovative “co-investing” approach works, explore its benefits and drawbacks, and help you decide if it’s the right option for you.
What Is Unison HomeOwner?
Unison is a real estate investment company that allows homeowners to access up to 17.5% of their home’s equity without taking out a traditional loan. Based in San Francisco, Unison has been around since 2004, and its unique offering—home equity access through co-investing—sets it apart from standard loan options like home equity loans or HELOCs. With Unison, you don’t have monthly payments or interest fees. Instead, you’ll share a portion of your home’s future value when it’s sold.
Through their HomeOwner program, you receive a lump sum of up to $500,000, which you can use for any purpose, such as remodeling, paying off debt, or other financial needs. Unison only claims a percentage of the increase in your home’s value upon sale. If your home decreases in value, their share also shrinks, making it a somewhat less risky venture than traditional loans, though it still comes with risks.
Unison’s offering is available in 28 states and the District of Columbia.
How Unison HomeOwner Works
The Unison HomeOwner program offers you immediate access to up to 17.5% of your home’s value. The funds are provided upfront, and there’s no repayment required unless you sell your home. Instead, Unison shares in the growth (or decline) of your home’s value when it’s sold.
Here’s how it works: If your home’s value increases, Unison will take a larger share of the gain based on their original co-investment. For instance, if you tap into 10% of your home’s equity, Unison will typically claim 40% of the value increase when the home is sold. While this may sound like a large portion, there are exceptions, such as if you use the funds for a remodel. In that case, you can file for a “Remodeling Adjustment” to retain 100% of the increase attributed to the remodel.
Unison’s claim is capped, and they charge a 3% transaction fee on the funds received, with additional fees possibly applying depending on the situation.
Key Benefits of Unison HomeOwner
- No Monthly Payments: Unlike home equity loans or HELOCs, Unison’s funding doesn’t come with a monthly payment. You won’t need to make interest payments, making it a debt-free option for accessing your home’s equity.
- Flexible Use of Funds: You can use the funds however you see fit, whether for home improvements, paying off debt, or other personal goals.
- Long-Term Access: Unison provides you with up to 30 years to use the funds before they need to be paid back upon selling the house. If your circumstances change, you also have the option to buy out Unison’s claim after three years.
Potential Drawbacks of Unison HomeOwner
- Giving Up Future Equity: The most significant downside of Unison HomeOwner is the equity you give up. In exchange for accessing your home’s equity, you’ll share a large portion of the appreciation when you sell. While this can benefit you if your home’s value rises slowly, it can cost you significantly more than a traditional loan if the value increases substantially.
- 3% Transaction Fee: You’ll be charged a 3% fee when you receive the funds. While this is not uncommon, it can still add up, especially if you’re accessing a large portion of your home’s equity.
- Potential for Deferred Maintenance Adjustments: If you neglect your home and it falls into disrepair, Unison may reduce their share of the home’s value. However, they may also increase their share if you neglect to maintain the home properly.
Alternatives to Unison HomeOwner
If you’re hesitant about sharing your home’s future value, there are traditional methods to access your home equity, such as:
- Home Equity Loans: A lump sum loan based on your home’s value, which requires monthly payments and interest.
- Home Equity Line of Credit (HELOC): An open credit line that uses your home as collateral, with flexible repayment options.
- Cash-Out Refinance: Refinancing your mortgage for a larger loan and receiving the difference in cash. This increases your overall loan but gives you immediate access to funds.
Each of these alternatives has its own pros and cons, depending on your financial situation and long-term goals.
Who Might Benefit from Unison HomeOwner?
Unison HomeOwner is a great fit for:
- Homeowners Who Need Quick Cash: If you need immediate access to home equity for a project or debt payment, Unison can be a faster and simpler option than traditional loans.
- Those Who Don’t Want Monthly Payments: If you’re looking to avoid new monthly obligations or interest payments, Unison offers a way to access funds without the usual debt structure.
- Homeowners Who Predict Low Future Growth: If you believe your home’s value may not grow rapidly, you may be okay with giving up a portion of the future increase.
Final Thoughts
Unison HomeOwner provides a unique way to access your home’s equity, especially if you’re wary of taking on additional debt. However, it’s essential to carefully consider the long-term financial implications of giving up a portion of your home’s future value.
Before you proceed, ensure you understand how much equity you’re surrendering and if it’s a better financial choice compared to traditional home equity loans or lines of credit. If you’re comfortable with Unison’s model and need cash without monthly payments, it could be an attractive option for unlocking your home’s equity.
If you’re unsure about whether Unison HomeOwner is the right choice for you, be sure to explore other financial products or consult with a financial advisor to find the best solution.
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