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Unison Review - Tap Into Your Home Equity With No Payments [HELOC Alternative] - YouTube
Channel: The College Investor
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what if you could take out a home equity
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loan and not make a single payment for
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30 years with traditional financing
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options that's not possible however
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unison a home ownership investing
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company can make that scenario a reality
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but the extra flexibility comes at a
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cost of the future appreciation in your
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home is it worth it
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that's what we're going to discuss today
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hey everyone this is andy with the
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college investor investing in personal
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finance for millennials if you're new to
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the channel and like what you hear today
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please hit subscribe so you're ready
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when our next video comes out thanks
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okay what is unison well unison is an
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investment company that lends you money
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in exchange for a share of future
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appreciation in your home they'll make a
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co-investment in your property up to
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seventeen point five percent of its
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current value with a minimum investment
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of thirty thousand dollars and a maximum
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of five hundred thousand dollars in
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exchange unison will take a cut of your
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home's future appreciation typically the
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exchange is four times the investment
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percentage so for example if unison
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invested five percent of your home's
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original agreed value it would receive
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20
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of its future value the most it could
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receive is 70 since the max investment
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it will make is 17.5 percent of your
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home's value because when you multiply
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17.5 percent times 4 you get 70
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but unison doesn't get its cut until you
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sell your home or until 30 years have
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elapsed until then you don't have to pay
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a penny so let's do a detailed example
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to make it easier to understand say you
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own your home that's worth 250 thousand
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dollars you receive a 10 investment from
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unison of 25 000
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and unison gets to keep 40 percent of
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the appreciation after seven years you
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sell your home for 350 000 which is a
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100 000 appreciation at that point you
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pay unison twenty five thousand dollars
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in principal return plus forty percent
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of the hundred thousand dollars or forty
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thousand dollars in total you would pay
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unison sixty five thousand dollars the
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remaining thirty five thousand dollars
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of appreciation profit is yours to keep
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all of the equity you built up through
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your mortgage payments is yours to keep
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as well so for example if you have paid
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your mortgage down by thirty thousand
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dollars you'd walk away from the sale
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with a total of sixty five thousand
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dollars in your pocket that's thirty
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five thousand dollars from appreciation
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and thirty thousand dollars from the
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equity you built by paying down your
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mortgage but what happens if my house
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declines in value you might ask well as
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an investor unison shares in the
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potential upside and the downside risk
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that means it will take the same
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percentage of losses due to depreciation
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as it takes for profits due to value
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growth again let's say you have a house
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that's worth two hundred fifty thousand
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dollars and you take twenty five
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thousand dollars of unison's money in
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exchange for a forty percent share of
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your home's future value but instead of
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rising the house value falls to two
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hundred thousand dollars in this example
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after seven years say you sell the house
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for two hundred thousand dollars you pay
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off your mortgage balance of 175 000 and
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you have 25 grand left over now you have
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to pay unison its principal balance of
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25 grand less its share in the loss its
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share in the loss would be 40 of 50 000
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or twenty thousand dollars in total
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you'd pay unison five thousand dollars
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meaning you walk away from the sale of
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the home with 20 grand perhaps you're
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thinking this may be an easier way to
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buy a house as well well unison has
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built a program for home buyers too but
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the program is currently not accepting
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new applications at this time if and
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when the pause on applications is lifted
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unison homebuyer provides down payment
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assistance as a home buyer unison will
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lend up to 10
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of the purchase price for a down payment
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you'll also need to put an additional 10
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percent of the value yourself using
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unison could help home buyers avoid pmi
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which is awesome again unison will
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receive a percentage of your home's
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future value in exchange for providing
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the down payment assistance and just
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like the homeowner program you don't
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have to pay back unison's co-investment
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until you sell or after 30 years let's
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talk about refinancing your mortgage if
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you decide to partner with unison they
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will allow you to refinance your
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mortgage within limits but securing
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financing could prove difficult your
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unison investment is technically a form
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of subordinate financing because of this
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unison says it's likely that some
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lenders will decline your application
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especially those that provide conforming
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loans unison also sets its own maximum
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authorized debt limit this limit is
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fixed so it won't ever increase even if
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your home's value rises over time let's
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say you're interested in buying unison
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out if you still live in your house
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after 30 years you'll have to buy unison
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out or sell your house and pay back the
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loan you may be able to buy unison out
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by taking out a heloc a home equity loan
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or even a reverse mortgage if you're
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over age 62 by that time but you can
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also simply use cash to buy out unison
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at any time after the three to five year
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restriction period for example if you
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plan to use the money you receive from
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unison to invest in a second property or
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a business you may be able to use your
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investment returns to pay back unison
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quickly without having to sell your home
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if you're wondering if unison is
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available where you live check out our
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list right here right now unison is
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currently available in about half of the
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u.s
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let's talk fees unison charges a 2.5
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origination fee that is deducted from
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your investment amount so for example if
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you're approved for a 25 000 investment
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the actual amount you receive will be
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reduced by 625 dollars to 24 375 you'll
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also be responsible to cover all
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third-party costs that are required to
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close the investment for example you'll
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need to pay for the home appraisal
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yourself as well as the settlement costs
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such as titles state taxes and reporting
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fees if you're thinking wow i've never
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heard of this home ownership investing
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concept before well it may surprise you
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to learn that unison isn't the only
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player in the market unison's two main
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competitors are home tap and point of
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the three unison charges the lowest
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origination fees at 2.5 percent it
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should also be noted that unison bases
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the value of your home on the appraisal
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minus that fee and won't discount that
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appraised value any further point on the
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other hand reduces your appraised value
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by 15 to 20 percent as a risk adjustment
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unison and point allow a maximum of 30
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years before repayment is required home
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tap however requires its investments to
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be repaid within 10 years which provides
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much less flexibility still home tap
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could be a good option if you have a
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mid-range credit as its minimum credit
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score is just 500. if you're ready to
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apply with unison begin by visiting its
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website in the description below and
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click the get started button in the top
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right hand corner next you'll type in
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your street address to get an instant
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estimate if it looks like your property
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might be a good fit for a unison
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investment you can continue working
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through the application process the
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process is similar in many ways to
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getting a mortgage a home appraisal will
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be required and you'll need to provide
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financial documents as well you'll need
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a credit score of 620 or more to qualify
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unison will run a soft check on your
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credit reports that won't impact your
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overall credit score that's the only
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credit inquiry you'll deal with
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throughout the entire process with
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unison remember you're not applying for
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a loan that requires monthly payments so
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unlike traditional lenders unison won't
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require a hard credit pull down the line
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when you're ready to finalize the deal
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so in the end is unison worth it well
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that depends most americans build up the
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vast majority of their wealth inside
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their homes that means that recommending
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any financial product that erodes home
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equity could leave the average person
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poorer that said using unison could make
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sense if you want to tap into your home
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equity for an investment for example you
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may want to buy a rental property using
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unison it could also make sense to use
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unison if you need cash to buy inventory
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for your business or otherwise fund your
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startup costs
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to learn more about unison check them
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out using the link in our description
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thanks for hanging out today this is
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andy from the college investor we'll see
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you in the next video
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you
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