American homeowners are collectively sitting on nearly $28.7 trillion worth of home equity. For perspective, that’s over $334,000 of equity per owner-occupied housing unit in the U.S. While traditional mortgage-lending models like home equity line of credit, cash-out refinancing and home equity loans provide a means of tapping into your home equity, they have drawbacks, especially in a rising interest rate environment. For instance, the variable interest that characterizes the home equity line of credit can lead to unpredictable and potentially higher borrowing costs, Cash-out refinance can exacerbate your overall mortgage debt, and like home equity loans, there’s a risk of foreclosure if you don’t pay on time. Additionally, these models require strict eligibility or qualification criteria.
What if you could access your home equity without undergoing stringent eligibility requirements or worrying about interest rates? That’s where Unlock Technologies comes in. Unlock Technologies offers a home equity agreement — an alternative to traditional lending models that lets you tap into your home equity without loans. The company invests in your home’s future appreciation by offering you cash upfront. A combination of factors, including the current value of your home, pre-existing mortgage debt and credit history, determines the size (amount of cash) and terms of the agreement.
Since it involves no loans, there are no interest rates and monthly payments to worry about. You only repay Unlock when you sell your home. For instance, you could receive 15 percent of your home’s equity upfront, which you can use as you see fit. In return, Unlock would acquire a 20 percent share in your home’s future appreciation. You could also buy back Unlock’s stake in your home over time without having to sell your home. Unlock accepts a FICO score as low as 500, making it an ideal option if you’ve got a poor credit history and limited cash flow but require a substantial loan for an expense that will enhance your long-term financial stability.
Read on for a constructive review of the platform, its pros and cons and how it can compare with other mortgage models.
- Homeowners with damaged credit history and limited cash flow seeking substantial cash to invest in projects that guarantee long-term financial security
- Entrepreneurs and small business owners seeking to leverage their home equity and access capital to invest in their businesses or expand operations
- Homeowners who wish to undertake renovation projects to enhance property value, as well as those interested in building an emergency fund or financial safety net using their home equity
- Real estate investors who want to access equity for new investment opportunities or fund higher education expenses
- Homeowners with substantial home equity who are considering moving within the next 10 years, which is the maximum term length for Unlock's services
- Low minimum credit requirements (FICO) of 500
- Flexible income and limited debt-to-income (DTI) requirements — Unlock is only interested in your home value
- No monthly payments — you don't have to pay until you sell your house at the end of the agreement
- No interest rate — Unlock is not a loan or lending firm
- Access funding in 30 to 60 days with little or no restrictions on fund use
- Streamlined application process from getting quotes to accessing funding
- The application process doesn't require hard credit pull and doesn't impact your credit score
- Access up to $500,000 worth of funding, and there's no need to refinance
- Could potentially complicate the process of obtaining another mortgage
- Receive less from your home when you finally sell your home
- Relatively low loan term of 10 years
- Operates in only 15 states
Unlock Ratings at a Glance
Unlock Product Offering
Unlock Technologies is a real estate investment firm that provides homeowners with an upfront lump sum of cash in exchange for the right to share a portion of the home's future value. Unlike traditional lenders or banks, the home equity agreement (HEA) is not a loan, so there are no monthly payments or interest charges. The company doesn't become a co-owner and won't be added to your property's title.
However, like traditional mortgage lenders, the company will place a lien on your property to safeguard their investment. While the company may request that you pay off certain debts or property liens during the origination process, it doesn’t impose further restrictions on the net cash you receive at the close of escrow. So you can use the money as you see fit, whether it's for financing your children's education, expanding your business or vacationing. You can access between $30,000 to $500,000.
Typically, the specific amount depends on a combination of factors, including your home's current value (higher value means more cash), pre-existing housing debt like mortgages and credit lines (higher debt means lower cash), credit history (excellent credit record means more cash) and property usage (primary residential houses may attract more cash). These factors can influence one another. For instance, a high-value home with significant debt may potentially qualify for a lower cash amount than a less expensive home with no debt.
You can sell your home or buy out Unlock's stake at any time within the HEA terms. You can also opt to buy out Unlock gradually in partial payments whenever you wish within the agreed-upon term. However, suppose you don't sell your home or complete the buyout of Unlock by the end of the term, typically 10 years. In that case, the company could require you to settle the arrangement by selling your home or completing the buyout. Eligible properties include owner and non-owner-occupied residential real estate (single-family, 2-4 unit properties, condos and townhomes).
Rental or investment properties are also eligible. However, suppose you hold the rental property within an LLC. In that case, Unlock will require a majority members agreement for the LLC that owns the property. Prefabricated homes like mobile homes or manufactured housing are ineligible. Unlock also doesn't invest in Tenancy in Commons (TICs), co-op or raw land. Besides the 500 minimum FICO score requirement, Unlock may request income verification to account for various risk factors that may impact its investment; for instance, it might want to verify the rent if your property is used as a rental property.
Various limitations apply; for instance, your credit report must be clear of foreclosure actions, bankruptcy, short sales or deeds in lieu of foreclosure within the past five years. Additionally, you must not have experienced a 90-day delinquency on any mortgage within the past 24 months. All limitations are clearly defined within the application process.
No bankruptcy, foreclosure action, short sale, or deed in lieu within the previous five years; no 90-day delinquencies on any mortgage within the prior 24 months; no 120-day delinquencies on any mortgage within the prior 36 months;
How to Apply and Access Unlock’s Home Equity Agreement (HEA)
From obtaining a quote to receiving approval, Unlock's home equity agreement (HEA) application process is fast and hassle-free. Here's a step-by-step guide to applying for HEA on Unlock's website.
Provide Basic Home Information
To begin, visit the homepage and click on "Apply Today." Then, you'll need to provide details such as your home address, the type and usage of your property, its estimated value, the current mortgage debt and an estimate of your credit score range. In this first step, you'll also need to provide some of your details (name, email and phone) and create a password.
Get a Preliminary Decision from Unlock
Once you complete the first step, Unlock will either decline your application or provide a preliminary approval based on your self stated information. If your property is eligible for a HEA you will be asked to fill out a soft pull credit form. This will not impact your credit.
Soft Credit Inquiries
To complete your application, in the next stage, Unlock will run a soft credit pull or inquiries using your provided information. While Unlock regularly works with consumers with FICO scores as low as 500, your credit report should be free of bankruptcies, foreclosure activity, or any mortgage delinquencies. This credit inquiry doesn't affect your credit score. If you pass the credit check, you can then start the application process.
Provide Personally Identifiable Information for the Title Occupants
The application then asks if you're applying as an individual, a trust or with other applicants on the title. Suppose you're applying with other applicants listed on the title. In that case, you must provide their personally identifiable information, including name, date of birth and Social Security number. You'll also need to provide similar information if you're applying as an individual. You'll provide the trustee's name and SSN if a trust holds the property.
Consent to Proceed
Suppose Unlock is satisfied with the information gathered. In that case, you will progress to the HEA education phase and subsequently grant your consent to proceed. According to the company, the entire process takes 30 to 60 days, from getting a quote to accessing funds. The wait time for home appraisals and inspections highly influences the specific duration. Unlock employs a licensed third-party appraiser or broker to provide a comprehensive valuation report on your home. The objectivity and accuracy of such appraisal and inspection process is central to the Unlock Agreement.
Educational Resources
Unlock Technologies provides educational materials via its blogs. Unlock's blog offers insightful content on diverse topics, including personal finance, home ownership tips and daily news updates. You can filter by specific topics, such as credit score, debt, home equity, home remodel, personal finance, small business and the mortgage market. The FAQ also provides comprehensive home equity information related to the company's offering.
Unlock offers customers support via email, text and phone. There's no live chat but that according to the company will be added late in Q4 2023. Phone support facilitates real-time assistance and personalized guidance. It is an ideal means of seeking fast information regarding Unlock's service. You can email the support team for less urgent inquiries or complaints requiring detailed explanations. However, the FAQ page is an even better option for quick access to information without relying on customer support.
It potentially covers every question you may want to ask the support team, including eligibility criteria, maximum accessible funding, pricing and how Unlock differs from traditional mortgage options. You can also connect with the team via Twitter, Facebook, LinkedIn and YouTube to watch demos and gain valuable information. Unlock holds an A rating on Better Business Bureau (BBB) reviews with a review score of 4.12/5; on Trustpilot, it boasts a rating of 4.6/5. Reviewer's comments on both platforms were overwhelmingly positive, reflecting excellent customer support.
Unlock Technologies prioritizes user privacy protection and implements robust security measures to enhance the safeguarding of clients' data. Personally identifiable information collected during application and underwriting processes is used for personalized service delivery in line with its service offerings and for marketing purposes. This data is securely stored online and protected against unauthorized access, identity theft or other cyber threats. Unlock Technologies doesn't share or sell users' data to any third party except on consent or when mandated in line with prevailing legal requirements or precedents. Users have the right to rectify, revoke, restrict and erase their data and can request such by contacting the company. California residents may be subject to different privacy policies per California laws. Unlock is neither a brokerage nor a bank and doesn't store the user's funds.
Unlike traditional mortgage lenders, you're not required to make monthly payments on the funds you receive from Unlock. However, you mustn't ignore the long-term costs, which are influenced by your home's value and how it evolves. Typically, Unlock generates a return when the home owner exits the agreement. when you pay the company more than the upfront fund you received, assuming your property appreciates, which is the most likely scenario.
Like most real estate transactions, the Unlock home equity agreement involves common upfront third-party expenses like appraisal, inspection, title, escrow, credit and recording fees. You're responsible for these expenses and can either pay them directly or reimburse Unlock for paying on your behalf during the underwriting processes. An origination fee of 4.9% of the investment is applicable to offset a portion of the company's expenses for processing and managing your home equity agreement.
For the $75,000 investment, the origination fee is $3,675. Assume third-party expenses add up to about $1,500; your net cash proceeds at closing will amount to $69,825. That is investment payment, less origination fees and third-party expenses. Unlock may pay you referrals for introducing customers. However, you're made aware of such payments and it doesn't impact the pricing or terms of your home equity agreement. More information about Unlock's fees and pricing is available in the product guide.
Unlock delivers a user-friendly experience through a streamlined, fast, efficient online application and underwriting process. Its transparent fee, term details and eligibility requirements accessible in the product guide reflect the company's overall transparent approach to real estate investing. Depending on your property value, mortgage debt and credit score, you can access up to $500,000 without restrictions on how to use the fund. Users benefit from excellent customer support, as evident from high ratings and positive reviews on independent platforms. Benzinga considers Unlock as a highly recommendable real estate investment firm.
Unlock vs. Competitors
* Our APRs can be as low as 3.00% for the most qualified applicants and will be higher for other applicants, depending on credit profile and the state where the property is located. For example, for a borrower with a CLTV of 45% and a credit score of 800 who is eligible for and chooses to pay a 4.99% origination fee in exchange for a reduced APR, a five-year Figure Home Equity Line with an initial draw amount of $50,000 would have a fixed annual percentage rate (APR) of 3.00%. The total loan amount would be $52,495. Alternatively, a borrower with the same credit profile who pays a 3% origination fee would have an APR of 4.00% and a total loan amount of $51,500. Your actual rate will depend on many factors such as your credit, combined loan to value ratio, loan term, occupancy status, and whether you are eligible for and choose to pay an origination fee in exchange for a lower rate. Payment of origination fees in exchange for a reduced APR is not available in all states. In addition to paying the origination fee in exchange for a reduced rate, the advertised rates include a combined discount of 0.50% for opting into a credit union membership (0.25%) and enrolling in autopay (0.25%). APRs for home equity lines of credit do not include costs other than interest. Property insurance is required as a condition of the loan and flood insurance may be required if your property is located in a flood zone.
Unlock provides a home equity agreement (HEA), considered by many as a better option than traditional mortgage models like home equity line of credit and home equity loans. Home equity lines of credit and home equity loans come with variable and fixed interest rates, respectively, and require monthly payments. In contrast, Unlock offers you cash upfront, and you have flexibility on when and how you can buy out the HEA. There's no interest or monthly payment. Although the amount you owe Unlock may increase, such an increase varies directly with your home value. Again, home equity line of credit and home equity loans require at least 680 and 700 credit scores, respectively, with other strict eligibility criteria. With a credit score of 500, you can apply and tap into your home equity via Unlock.
The Unlock model also slightly resembles reverse mortgages. A reverse mortgage is essentially a loan that accrues interest over time, meaning that the total amount you owe can increase regardless of changes in your home value. To be eligible for a reverse mortgage, you must be at least 62 years old and have your existing mortgage paid off at closing. However, Unlock does not have an age requirement or require you to pay off your existing mortgage as a qualifying condition.
Unlock's core competitors include HomeTap, Homepace, Unison and Point. All these firms offer equity-sharing contracts with similar operational models and slight differences in pricing, maximum investment and term. For instance, Homepace offers a maximum investment of $250,000 for a 15-year term compared to Unlock, with up to $500,000 maximum investment for a 10-year term.
Unlock provides a streamlined process for accessing home equity with personalized offers, transparent terms and excellent customer satisfaction. No interest and monthly payments are needed since its HEA is not a loan. You can access up to $500,000 worth of equity and use it as you see fit. You also have flexibility regarding how you wish to exit the agreement, whether by buying out Unlock's stake at the end of the term or selling your home and using the money from the sale to pay Unlock's share. The application process is straightforward, and the eligibility criteria are flexible. However, the company operates in only 15 states, and although the maximum term length of 10 years is the industry average for such types of shared equity products, it is short. Unlock could be ideal if you need fast funding for a vital project or plan to move within the next 10 years.
Frequently Asked Questions
Is Unlock a legit real estate firm?
Unlock is a legitimate, trusted and reputable real estate company offering home equity agreements in 15 states of the U.S.
What minimum credit score does Unlock accept?
Unlock accepts applicants with a credit score as low as 500 as long as they meet the other eligibility criteria.
What is the timeframe for receiving funds from Unlock?
Accessing funding typically takes around 20 to 60 days from application to approval.
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