Unlock Your Home Equity With A Home Co-investment – Written by David McMillin Written by David McMillinArrow Legal Contributing Writer David McMillin is a contributing writer for and covers topics such as credit cards, mortgages, banking, taxes and travel. David’s goal is to help readers know how to save more and less stress. David McMillin
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Unlock Your Home Equity With A Home Co-investment
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You’ve Got Home Equity. What Should You Do With It?
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If you’ve been making regular mortgage payments, you’ve built up equity in your property. That savings can help you secure money for other big expenses like paying for college, paying off debt, and renovating your home.
San Francisco-based Open Technologies is designed to help you access that money. The company does not offer home equity loans or home equity lines of credit (HELOCs) that use your home as collateral and come with monthly payments and financing fees. Instead, the company uses the home business contract it operates as an investment. This gives the company some equity in the property in exchange for receiving cash today while Unlock can share in the profits from its property appreciation. This is similar to the way an investor will share in the profits of a company’s rise in market value.
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Unlocked has been around since 2021 and is certified by the Better Business Bureau. Previous clients for high marks too. The company has a 4.6 out of 5 – excellent – rating based on nearly 90 Trustpilot reviews. Right now, those customers are limited to just 15 states. Open runs in Arizona, California, Colorado, Florida, Michigan, Minnesota, Nevada, New Jersey, North Carolina, Oregon, South Carolina, Tennessee, Utah, Virginia and Washington.
Unlock pays you today for the opportunity to receive a portion of the proceeds from the sale of your home up to 10 years into the future. The company offers anywhere between $30,000 and $500,000 depending on your property, finances and equity amount.
A typical deal might give you 10 percent of your home’s value in exchange for 16 percent of its future value. For example, if your home is worth $300,000 today, you can borrow $30,000. Eight years later, your home goes into contract for $400,000. When you close the deal, you’ll be left with $64,000.
Landlords have many choices about how to fulfill the contract. They can sell the home at any time, or they can buy back the home equity in increments or over time. When the contract is concluded, borrowers will be repaid according to the original terms (eg 10 for 16%).
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To work with Unlock, you’ll need to create an account and submit a few pieces of information: your state ID, proof of homeowner’s insurance, and previous mortgage details. The preliminary approval process takes approximately 60 minutes. If the terms are good, you will need to spend another 5-10 minutes to complete the full application. This begins a routine 30-day process that includes an appraisal and a home inspection. According to Open, the process can move as quickly as 10 days.
If you need immediate access to cash and have built up less than 20% equity in your home, Unlock may be a good fit. The company requires a FICO score of around 500, so it may be the best choice for someone with subpar credit who may struggle to get approved for a home loan or a HELOC.
For example, if you’re struggling to make minimum payments on a large portion of high-interest credit card debt, Unlocking can be a good solution. By eliminating your debt burden today, you can avoid continuing to incur costly financial obligations.
All unlock contracts work over a period of 10 days. Once you sign the contract, the company places a lien on your property. After a period of six months, if you want, you can start buying industrial trees in your home with partial payments or a lump sum. Once your lease ends at the 10-year mark, you will need to buy the Open or sell your home.
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Unlocking has no monthly payments or interest charges. However, you will be responsible for a 3% setup fee and expenses for the appraisal and inspection of your home. You will also be responsible for covering the costs of documenting the transaction with the relevant record holder. Those expenses vary depending on the size and location of your home, but common appraisals run between $300 and $450 with home inspections carrying the same price tag. Notary and title fees can vary, but if you’re considering working with Open, get an estimate of all additional fees up front.
It’s exciting to get a loan quickly without making payments or incurring additional interest, but there are pros and cons to “unlocking” that loan. Weigh the immediate benefits with the potential long-term consequences before signing on the dotted line.
Open is not the only company that operates on the equity-for-futures-equity approach. See how it compares to other names that have a similar business model.
If you need cash flow immediately, Unlock is a simple solution that won’t affect your monthly budget and won’t weigh you down with additional interest charges. Another big draw of the company is its willingness to work with homeowners with credit scores as low as 500.
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However, it is important to understand what you are giving up to get your money. One of the
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