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Homeownership is a goal for many people starting out in their adult lives, and owning a home is often one of the most critical investments we make.
However, it can be challenging to purchase a home, especially when we do not have sufficient money for a down payment. It can also be challenging to unlock the equity you’ve built in a home you own, either to upgrade that home or to invest in a business, or pay off debts.
Depending on your current financial situation, a home co-investment may be a great benefit to you in your home buying search. This could help you purchase a home you otherwise couldn’t afford as well as give you the ability to be approved for a home purchase in a much more rapid fashion. This can be of great benefit to you if you are in a situation where you need to change your living situation and don’t have the time or ability to quickly put a big home down payment together.
As the web-based and mobile app market has become more mature, we have seen greater innovation in putting your home to work for you as an investment. In fact, there are now more options than ever when it comes to tapping into your home’s equity and getting the cash out without ever taking a loan from a traditional lender.
If you are interested in accessing your equity right now, one option you should consider is Unison. This terrific co-investing platform can help you use all of that equity in your home to achieve some financial goals or purchase a home today instead of waiting for some point in the future when you’ve put enough money together for a sizable down payment.
With that in mind, let’s take a look at the Unison, so you can determine if it is a good fit for your financial needs.
Onto our Unison review!
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What is Unison?
Unison Home Ownership Investors, better known as Unison, is a financial services company focused on homeownership and equity investment. It was founded in 2004 and is based in San Francisco, California.
The company allows homeowners or home buyers to make down payments on a new home purchase or unlock the equity in their home; homeowners can receive a portion of that equity in cash, which they can use either as a down payment, to fund home renovations, or for some other purpose, such as to fund a business or pay off other debts.
The cash homeowners receive for their equity is not a loan, but is instead co considered an investment on Unison’s part; at some point in the future, Unison will either share in the home’s appreciation, or in a loss if the home depreciates, based on the percentage of equity it originally invested in.
This is a highly innovative way of going about a home purchase because you are not necessarily required to give payments to Unison. They are certainly going to get paid for this investment in the future, but it is not going to be a payment in the sense that you are sending them in each month, like you would if you’d taken out a home equity loan.
It will basically be a share in the home when it eventually sells. That makes it a viable option for increasing the down payment which will, in turn, lower the mortgage payments. The catch is that you won’t have as much equity in the home when you eventually sell it, since you’ll be repaying Unison.
However, depending on your current financial situation, that may be something that is worth giving up in order to be able to unlock your equity right now.
In order to use Unison, you must be an American citizen or resident of the United States over the age of 18. You must also own or be purchasing a home in one of the states where Unison is currently available.
You must also meet certain credit score and income requirements to be available for Unison’s equity co-investing program as well.
In addition to that, the home must be a primary residence and must have a value of at least $100,000. The reason for this is that Unison is looking for people who need help with a traditional home purchase.
They are not setting out to help people purchase any sort of second home, like a condo or vacation home. This can perhaps be something that is offered by Unison in the future but for the time being, they are only seeking to work with people who are making traditional home purchases.
It is also important to note that just because you are eligible does not mean that Unison’s program is necessarily a good option for you. There is also the possibility of not getting approved when you apply for a deal with them.
There are a number of reasons why they may decide against approving your application and they hold the right to decline any deal that they find to be too risky for their business.
- American citizen
- Over 18 years of age
- Credit score requirement
- Home value over $100,000
More of our Unison review is below.
How it Works
If you’re buying a home, Unison will provide buyers a no-interest down payment loan in exchange for a share of the equity in the home. Upon purchase of a home, the platform will provide some share of a cash down payment in exchange for a share of the home’s future appreciation.
There is no interest rate or monthly payments. At some point in the future when the home is sold, the homeowner is responsible for paying back the loan amount, along with whatever the agreed-upon percentage of appreciation was at the time of the loan.
If you’re currently a homeowner, Unison will purchase up to 20 percent of the equity you have in your home, providing cash in exchange for its investment.
Again, the platform will provide this loan in exchange for a share of the home’s future appreciation. At a certain point up to 30 years from the date of the contract with Unison, the homeowner will be responsible for paying back the platform’s original investment, plus any additional appreciation.
Conversely, if the home depreciates over a period of time, Unison will share in the loss of the property’s value as well.
There are some additional details involved in working with Unison. As stated earlier, users must have decent credit in order to be eligible for the platform’s programs.
Additionally, Unison does charge some fees when conducting transactions with users; there is a 2.5 percent origination fee for the down payment assistance program, and the platform also charges a 3.9 percent transaction fee for the equity cash-out plan.
There are also stipulations about how the property must be maintained in these programs as well.
Benefits of Working With Unison
If you decide to do business with Unison, you are going to be able to experience home buying like it’s never been done before. In a traditional home-buying situation, you save up your money for a few years and try to save up a down payment of about 20%, and that 20% could easily be in the six-figure range.
From there you would be faced with a sizeable mortgage loan with high-interest rates. Oftentimes, when you take out a 30-year mortgage with a 20% down payment and a 3% interest rate, you will end up spending almost double what the initial home price is.
That is where Unison comes in; if you go through with a home purchase through their co-investment platform then you are going to have to pay much less for the home in the long run. This is because they help you with a significant increase in your down payment, and that down payment also turns into equity in the home.
Why is Equity Important?
Having a high level of equity in your home is a great way of building long-term wealth. Equity is essentially the market value of your home, minus whatever you still owe. In an ideal situation, your equity level is a positive number.
The idea of equity as a long-term investment is very similar to investing in a bond due to the fact that the money is tied up and cannot be spent for an extended period of time. This is due to the fact that a mortgage payment is slowly decreasing what you owe on the home.
While you’re doing this, your home is appreciating in value. This has ultimately given paying off a mortgage the title of a “forced savings account.” After an extended period of time, often around two decades, it is possible to notice a sizable stockpile of cash that you are able to claim.
This is only possible if the overall value of your home has successfully increased; there is a possibility that your home decreases in value throughout the course of a couple of decades.
Who Is Unison Good For?
In the financial world, there could be an excellent service that is offered but doesn’t make sense for certain people to buy into that service. That is not to say that the service provided is poor, but it does indicate that whatever is being offered may not make sense for your current situation. With that in mind, let’s walk through some of the financial situations that can benefit from the services offered by Unison.
The ideal person to work with Unison would be someone who is not currently ready to make a sizable down payment on their home. As co-investors, Unison will help you with your down payment, all that is necessary is that you are able to put 5% down. Additionally, Unison’s co-investing platform may also be a good option for you if your credit score is less than stellar since someone with fair credit would likely be required to put a larger down payment down on a home loan.
How Does the Unison Process Work?
Unison prides itself on its ability to make the process nice and simple for users to get through. This is excellent because many steps associated with purchasing a home can be tedious and complicated. Unison essentially breaks down the process into four simple steps so that you can get your co-investment with as little of a headache as possible. Let’s take a walk through the four steps to closing a deal with Unison.
- See If Unison Is Right For You: Do you fit the criteria that was noted under the section that describes who Unison is good for? If you fit that criteria, then it may be a viable option to take the next step of the process.
- Complete An Application: This is a standard with everyone who does business with Unison. Even if you fit the criteria there is the possibility of not getting approved for a co-investment with Unison. There are a number of reasons why Unison may decline an application but for the most part they seem to accept many of their applicants.
- Schedule An Appraisal: After you are approved, you will come together with an agent from Unison in order to inspect the property that you are looking to purchase. This is important for Unison because they will have a better understanding as to whether they can expect a return on their investment down the road.
- Sign A Deal: Once there is a property agreement, you are then set to sign the paper officially putting you in a deal with Unison. This means that you are going to be making the down payment on your home shortly after that paper is signed.
Overall, while the process of working out a deal with Unison is simple, there are, of course, going to be some roadblocks here and there but this is a general overview as to what to expect. Unison wants this process to move along just as quickly as you’d like to, this is why they built their platform to be as easy as possible to use and navigate through.
Unison Reviews & Complaints
Unison only has one review on Trustpilot, so its profile there is too immature to draw any conclusions. However, the platform has been accredited with the Better Business Bureau since 2013 and carries an “A+” rating with the BBB.
The most important thing that there is to note about Unison is the fact that they are certainly a legitimate service that will provide an actual benefit. This company is far from a scam and that can be easily noted through the aforementioned A+ rating on BBB as well as the effectiveness and responsiveness of their customer service
Additionally, the Motley Fool did a full review of Unison, and they have an overall positive outlook on the service that Unison provides and lauded their track record of customer service as well. The Motley Fool does note some of the risks and disadvantages that come with co-investing platforms like Unison; however, overall, the platform received high grades on the Motley Fool.
While there are not as many online reviews of Unison as there typically are for other financial services websites and apps, it is important to note that the deals customers make on the platform can continue for up to three decades. People don’t typically give a review of a financial service until that deal is closed so that they can review the entire experience. With Unison having only started their company in 2004, it makes sense as to why there are not many customers putting out reviews; many of them are still in the middle of their transactions!
Unison Pros & Cons
Here are some of the key pros and cons of working with Unison to access your home’s equity:
- Path to Home Ownership. Prospective homeowners who lack the cash for a down payment may be able to buy a home they otherwise couldn’t afford using Unison and could end up with lower monthly mortgage payments as well.
- Access Equity. The platform allows homeowners to access their equity without taking out a loan or home equity line of credit (HELOC)
- No Payments or Interest. Since any cash you receive from Unison is not a loan, you won’t have to worry about making monthly payments or interest accumulating over the life of the transaction.
- Shared Loss. If your home depreciates in value, Unison will share in that loss with you, which will decrease your overall financial burden.
- Appreciation Risk. If your home appreciates in value significantly, you could end up owing Unison more than if you’d used some other means to access your equity, such as a home equity loan or HELOC.
- High Fees. There are substantially high transaction fees associated with the platform’s down payment and equity programs on the Unison platform.
- 30 Year Repayment Window. Homeowners have 30 years to repay Unison; if there isn’t an opportunity to do so along that time horizon, you could be forced to sell the home.
If Unison isn’t a good fit for you, there are other shared equity companies you should definitely consider. Some of the top alternatives to Unison include:
Unison Review: Parting Thoughts
If you need assistance with a down payment on a home you want to buy or need to access the equity of your existing home, make sure you check out Unison. This shared equity may be just what you need to put your home’s equity to work for you right away.
Thanks for reading our Unison review.
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