Tap Your Home Equity For School – With No Payments!

Home Equity
You have some equity in your home and it would be great to be able to use it to pay for your student’s schooling. However, you can’t afford to take out more debt and make more payments.

 

Are you stuck?

 

Not anymore. A new product, called Unison Homeowner, allows you to partner with investors to gain access to cash. You don’t make payments, instead, you share the gain or loss on your home when you sell it.

 

How does it work? Is it too good to be true? Find out below.

 

 

Who Is Unison And Why Can They Give You Money?

Unison is a company that brings together institutional investors – like pension plans or other major investors – and homeowners to help each of them access the funds they need.

 

Because homes generally appreciate over longer periods of time, long-term investors enjoy putting money into them. Unison facilitates that, giving you access to immediate cash. Then, when you sell your home, you and Unison share the appreciation profit. Everyone wins.

 

What if something happens and the home depreciates? In that case, you and Unison share in the depreciation. Everyone loses. However, Unison and the investors behind them are counting on winning with more homes than they lose with, making them a profit overall.

 

 

How to Apply for Unison Homeowner

Unison makes it easy to apply online. You start with a simple prequalification that will not impact your credit score. In less than a minute, you’ll know if you qualify for a full application.

 

With a full application, you’ll give more information and provide needed documentation. Unison will give you an estimate of how much money they can provide in cash.

 

Finally, there’s a home appraisal. An independent appraiser will make a report of your home, and Unison will give you a formal offer. You can receive cash up to 20% of your home’s value, up to $500,000, depending on your circumstances. There is a 3.9% transaction fee deducted from the cash payout that covers all costs, including the appraisal and settlement fees.

 

You can use the money for anything you want – repairs, school, paying down debt, or even just to have cash on hand.

 

 

What’s the “Repayment” Process for the Home Equity?

With Unison, you aren’t getting a loan. That means there are no monthly payments, no interest, and no debt.

 

Instead, you’re partnering with an investor. Unison is not intended to be a short-term investment, so you need to plan to stay in your home at least three years.

 

They provide you a certain amount of cash at the beginning. When you sell your home, Unison gets the investment back and you and Unison share in the appreciation or loss on your home.

 

Unison can share between 17.5% and 70% of the appreciation or depreciation, but the most common amount is 35%. The amount shared will be clearly stated in the formal offer during the application process.

 

Here’s an example:

  • Your home is valued at $500,000
  • Unison invests 10% of the value in return for 35% of the appreciation
  • You receive $50,000 in cash, minus a 3.9% fee
  • When you sell your home, you are able to get $575,000
  • Unison receives their investment of $50,000, plus 35% of the appreciation ($26,250) for a total of $76,250.
  • The remaining $498,750 goes to you (and your lender if you are paying off your mortgage.)

 

What if your home loses value?

 

Here an example for that:

  • Your home is valued at $500,000
  • Unison invests 10% of the value in return for 35% of the appreciation
  • You receive $50,000 in cash, minus a 3.9% fee
  • When you sell your home, you are able to get $450,000
  • Unison receives their investment of $50,000, minus 35% of the depreciation ($17,500) for a total of $32,500.
  • The remaining $417,500 goes to you and your mortgage lender.

 

 

Answering Common Questions

Because this is a new way of doing things, there are bound to be a lot of questions. Here are answers to some of the most common concerns about Unison Homeowner.

 

How Can Unison Afford to Lose Money?

The investors behind Unison invest in far more than one home. The intention is that on balance, the home portfolio will increase in value more than it decreases in value. Of course, if it does drop for a year or two, the investors lose money during that time.

 

What if I Add to My Home?

If you make an addition to your home that creates a significant increase in home equity, you can arrange to keep that value yourself without sharing it with Unison. You simply fill out some paperwork and get a new appraisal to show the official value of the addition (which may be more or less than it cost you to make the upgrade.)

 

Are There Rules?

Unison does require that you keep your home in good shape and take normal care of it as any homeowner would. If the home loses significant home equity due to neglect, Unison can file paperwork to not share that depreciation with you.

 

Do I Have to Sell My Home at a Certain Time?

Unison is willing to invest in your home for up to 30 years or until everyone who signed the deal passes away. If you sell before 30 years, you share the increase or loss of value. You can also buy out Unison’s investment at any point after three years. If you get to the 30-year mark and do not wish to sell your home, you can instead buy out Unison’s investment.

 

Is Unison Available Nationwide?

At the time of this writing, Unison operates in 22 states and the District of Columbia. They are looking to expand as well, however.

 

 

Is Unison Homeowner Right For You?

Only you can make important financial decisions for your family, but Unison Homeowner can be a great option for paying for college. Tapping your home equity while avoiding debt, not having monthly payments, and having confidence that you won’t be forced out of your home are big upsides.

 

If you’re planning on staying in your home for at least three more years, you owe it yourself to at least investigate this option. You can be prequalified in minutes with no impact on your credit.

 

[More information on Unison and their Home Ownership product – Getting Down Payment Help Now. Sharing Home’s Gain (or Loss) Later]

 

Paying for college isn’t just about finding the funds, it’s also about finding the right college. Knowing which schools are the most generous in your situation is vital. Check out our toolkit today!

 

 

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  1. […] are very popular among families in our Facebook group. However, there’s also a program called Unison we highly recommend you look into, where you partner with investors and share the appreciation of your home when you sell. With this […]

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