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Unison Review: Better Than a HELOC?

Unison Home Equity Review
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Thinking about leveraging your home equity for extra cash?

You no longer have to borrow against it with a home equity loan or line of credit (HELOC) and make regular payments to a lender.

Thanks to home equity sharing companies, you can access cash using your home equity without adding a monthly payment.

One of these companies is Unison, and in this review we’ll go over how it works and how it stacks up against the competition.

Unison Basics: How it Works

Unison gives you money today in exchange for a share of your home’s future value. In other words, they invest in your home hoping it will go up in value. 

This is not a home equity loan, a HELOC, or any other debt product; you don’t have to make monthly payments, and there are no interest charges.

Instead, you pay back the company’s investment (plus their share of your home’s appreciation) when the term expires or when you sell your home. You can also buy out part or all of the company’s stake in your home after five years.

Unison Costs and Fees

When you sell your home or your term ends, you’ll owe Unison its original investment plus its share of your home’s appreciation.

To best explain how this works, there are some definitions we need to cover that are specific to Unison. 

  • Original Appraised Value: the amount your home is worth today. 
  • Original Agreed Value: your appraised value at the start of the agreement minus a 2.5% risk adjustment fee (which we’ll discuss later in the article). 
  • Ending Agreed Value: the value that’s agreed upon at the end of your Unison contract. 
  • Co-Investment: the amount of cash you receive from Unison. 
  • Investor Percentage: the portion of your home’s appreciated value you’ll pay back to Unison. 

Now, let’s look at an example. 

Say that an appraisal finds your home to be worth $500,000, and you’re looking for a co-investment with Unison of $50,000. 

Original Appraised Value:$500,000
Percentage of your home’s value you receive upfront:10%
Co-investment:$50,000

In this example, you get $50,000 in cash from Unison. There are no payments and no interest charges on this $50,000. 

At the start of the agreement, you also know your Original Agreed Value (OAV). 

Original Agreed Value = Appraised Value – 2.5%

This OAV doesn’t impact the amount you get from Unison upfront, but it will determine how much you pay them back. (More on this below.) 

You also know your Investor Percentage upfront, which is the portion of your home’s appreciated value you’ll owe Unison at the end of your agreement. 

This varies based on your agreement, and can be anywhere from 20% to 70%. 

Unison states that in the majority of agreements, the Investor Percentage will likely be 40%. So that’s the figure we’ll use in our example.

So to sum up what we know at the beginning of the agreement:

Original Appraised Value:$500,000
Percentage of your home’s value you receive upfront:10%
Co-investment:$50,000
Original Agreed Vale (OAV):$487,500
Investor Percentage:40%

Let’s move on to the end of the agreement. 

Imagine you sell your home 10 years later without any change in value. 

What you’ll owe Unison is 40% of the appreciated value of your home, based on your OAV.

Original Appraised Value:$500,000
Ending Agreed Value:$500,000
Original Agreed Vale:$487,500
Appreciation:$12,500
Amount you owe Unison (40% of appreciation + original stake):$62,500

Note that Unison charges a 3% transaction fee — deducted from your initial proceeds — upon closing the deal. If you move forward with Unison, you’re also responsible for third-party fees, such as appraisals.

Depreciation

You may owe Unison less than what you originally borrowed if your home depreciates, given a long enough timeframe and enough depreciation. 

However, note that if you buy Unison out early or sell your home within five years of closing on the deal, Unison will not share any losses on the home.

Otherwise, you may pay back less than what Unison gave you.

Going back to the previous example, imagine you own your home for six years before selling. When you sell, your home’s value has dropped to $450,000. 

Keeping in mind that the Risk Adjusted Value of your home was $487,500, Unison’s share of the depreciation would be -$15,000 (40% of -$37,500). Subtract this from Unison’s $50,000 initial investment to arrive at $35,000 — the amount you’d owe Unison.

Original Appraised Value:$500,000
Cash received from Unison:$50,000
Risk-Adjusted Value (2.5%):$487,500
Future home value (after six years):$450,000
Appreciation based on Risk-Adjusted Value:-$37,500
40% of appreciation:-$15,000
Amount you owe Unison (40% of appreciation + original stake):$35,000

Of course, failure to maintain the property would lead to a significant decrease in value. Unison accounts for this possibility, which we’ll cover in a moment.

But first, let’s look at what happens when your home appreciates in value. Say that at the end of six years, you find your home is worth $600,000. 

Original Appraised Value:$500,000
Cash received from Unison:$50,000
Risk-Adjusted Value (2.5%):$487,500
Future home value (after six years):$600,000
Appreciation based on Risk-Adjusted Value:$112,500
40% of appreciation:$45,000
Amount you owe Unison (40% of appreciation + original stake):$95,000

Upkeep

If you don’t properly maintain the home, Unison will not share in property value loss. 

Unison protects itself against this eventuality by applying a Deferred Maintenance Adjustment when calculating final proceeds. This adjustment reduces the loss Unison shares with you, thus increasing the amount you owe. 

Unison uses one or more appraisals and repair estimates from third-party providers to determine how much property value loss was due to improper upkeep.

If you and Unison can’t agree on an amount in good faith, they move things to arbitration.

Renovations

Unison offers a Remodeling Adjustment to exempt appreciation attributable to remodeling from the final settlement calculation.

You must hire licensed contractors and document the project to qualify for the Remodeling Adjustment. Unison then hires a third-party appraiser to determine your home’s new value and calculate how much increase is due to renovations.

For example, if you remodel your home, increasing its value by $75,000, that $75,000 is then removed from your final appraisal.

This policy allows you to use your proceeds for renovations and boost your home’s value without owing more.

Application and Eligibility

Unison doesn’t have a minimum home value requirement. However, they do require that your mid-FICO credit score (i.e., the middle of your three FICO scores) be at least 650. 

Unison’s maximum loan-to-value ratio is 75% with an excellent credit score. A strong score can also help you maximize approval chances and terms despite a low debt-to-income ratio.

At the time of writing, Unison is available in more states than its competitors: 

  • Arizona
  • California
  • Colorado
  • Delaware
  • Florida
  • Illinois
  • Indiana
  • Kansas
  • Kentucky
  • Massachusetts
  • Michigan
  • Minnesota
  • Missouri
  • Nevada
  • New Jersey
  • New Mexico
  • New York
  • North Carolina
  • Ohio
  • Oregon
  • Pennsylvania
  • Rhode Island
  • South Carolina
  • Tennessee
  • Utah
  • Virginia
  • Washington
  • District of Columbia / Washington D.C.
  • Wisconsin

How Much You Can Get

Unison lets you borrow up to 17.5% of your home’s value, with a maximum dollar figure of $500,000. That’s the highest dollar figure of any of the big home equity sharing companies, but the percentage is actually lower.

Consequently, Unison looks to be a good choice for those with more valuable homes.

Of course, exact amounts depend on your property value, equity in the property, credit score and DTI ratio.

To determine your home’s value, Unison hires a third-party appraiser. This is the Appraised Value. From there, Unison subtracts the 2.5% risk adjustment from your Appraised Value to arrive at the Original Agreed Value.

Unison considers your home’s value to be the Original Agreed Value for purposes of calculating your proceeds.

Unison Pros and Cons

Here are some benefits and drawbacks to working with Unison.

Pros:

  • 30-year terms. Unison’s 30-year term gives you ample time to recoup Unison’s investment and pay it back on time. It’s longer than Hometap’s and Noah’s 10-year terms. 
  • Maximum cash amount. Unison’s $500,000 maximum cash amount is much higher than its competitors’ maximums.

Cons:

  • Risk adjustment. Unison uses a 2.5% risk adjustment, which lowers the final amount you receive and increases your cost. Still, it’s much lower than the risk adjustment of its competitor Point, which can be as high as 25%.
  • Percentage of home value obtainable. Unison may let you borrow up to $500,000, but the actual amount you can get is capped at 17.5% of your home’s value — a lower percentage than its competitors.
  • Credit score. Unison’s 650 credit score minimum may exclude interested borrowers whose credit may already be too low for traditional home lending options.

Unison Competitors and Alternatives

Unison’s three primary competitors are Hometap, Noah and Point. Now that we’ve covered Unison in-depth, let’s compare it against these companies. You can also learn more in our roundup of the best home equity sharing companies.

  • Hometap. Unlike Unison and the other competitors, Hometap takes a share of your home’s appraised value at the end of the term or when you sell, instead of the original investment plus appreciation. Hometap requires a 600 credit score and offers 10-year terms and a max loan-to-value ratio of 75%. You can take out up to 30% of your home’s value for a max dollar figure of $300,000. Hometap applies no risk adjustment.
  • Noah. Noah’s term length is only 10 years, and it requires a minimum property value of $300,000. You can obtain up to $350,000 (less than Unison’s $500,000), but Noah lets you borrow up to 20% of your home’s value, compared to Unison’s 17.5%. Noah’s maximum loan-to-value requirement is 85%.
  • Point. Like Unison, Point offers 30-year terms. Servicing fees range from 3% to 5%. Point will hand out up to $350,000, depending on your equity and home value. Point’s 20% to 25% risk adjustment is much larger than Unison’s 2.5%.

Key Questions About Unison

Can you use Unison with vacation homes and/or rental properties?

Unison does invest in vacation homes in some cases. They ask that you plug in your address to see if the property qualifies. However, they do not invest in rental properties unless they’re owner-occupied. To qualify as owner-occupied, you must live in your home for 180 days in a 365-day period without being away from your home for more than 60 consecutive days.

What happens if your home enters foreclosure?

Unison will extend “Protective Advances” to you, which are funds they provide to keep you current on your mortgage payments.

You can pay back these advances whenever you’d like over your term. However, these advances are due back to Unison along with your regular amount owed when you sell the home or when your term ends. Unison also charges interest on advances until they are repaid.

Unison can also offer an “Orderly Sale,” which prevents your home from being “distressed,” protecting your credit and your home’s value.

Our Take: Is Unison a Good Deal?

Is Unison right for you?

Our stance is that home equity sharing companies are ideal for those who can’t obtain a traditional home equity loan or HELOC. With interest rates being low, and these loans having a fixed-rate, traditional lending methods are best suited for those who qualify. 

Home equity share agreements make sense for those who have a large amount of equity in their home, and would benefit substantially from the cash they’d receive today. For example, many people turn to home equity sharing companies to pay off substantial credit card debt or to keep their home out of foreclosure. 

Unison in particular is a decent option for homeowners in expensive real estate markets, as well as for those whose property values are high, given its low maximum percentage paired with its high maximum dollar amount. 

It’s also suitable if you’re looking to renovate your home. Unlike some competitors, Unison will exempt any appreciation that results from renovations. 

Regardless, it’s best to compare each home equity sharing company against each other, as well as home equity sharing as a whole against traditional home lending. 

We’ve written reviews on Unison’s three competitors — Hometap, Point and Noah — so check those articles out to see where they stand.

R.J. Weiss
R.J. Weiss is the founder and editor of The Ways To Wealth, a Certified Financial Planner™, husband and father of three. He's spent the last 10+ years writing about personal finance and has been featured in Forbes, Bloomberg, MSN Money, and other publications.

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