Unlock Technologies is a financial technology company that provides products and services to help consumers solve financial challenges. The company offers a home equity agreement (HEA), which enables homeowners to access the equity they have built in their homes without taking out a loan.
With an HEA, homeowners receive cash up front (anywhere from $30,000 to $500,000) in exchange for a portion of their home’s future value. Homeowners can then use the cash for up to 10 years without accruing interest charges or making monthly payments, and can buy back their equity at any time during the 10-year agreement. Because of its flexible income and credit requirements, Unlock serves as an alternative resource for homeowners who might not qualify for home equity loans or credit lines through traditional lenders.
Consumers typically use the funds from an HEA to pay down debt, make home improvements, boost savings, or pay expenses. Unlock is currently operating in 15 states.
Unlock’s home equity agreement isn’t a loan, which means homeowners don’t need to make payments as they would if they had borrowed money from a bank or lender. Homeowners receive a lump-sum payment, based on a percentage of equity they want to sell, and Unlock receives a percentage of the home’s future value when the customer sells or buys back their equity.
Unlock provides customers with the ability to buy back their equity at any time during the term and allows customers to do a partial buy-back, making it one of the only home equity companies to offer that option.
Loans require borrowers to make monthly payments based on a specified interest rate, but an Unlock home equity agreement enables homeowners to defer the cost of financing until they terminate the agreement. This gives homeowners the power to use their equity interest-free for the duration of their agreement.
To qualify for a typical home equity loan or line of credit, borrowers should typically have debts less than 43 percent of their monthly income. However, to qualify for an Unlock HEA, customers only need 30 percent equity in their home and a minimum credit score of 500. Note that the company will ask for income verification in some cases, such as when the customer’s property is used as rental property.
Sometimes, getting a loan can be quite a tedious process. However, according to Unlock, it takes just a few minutes to create an account and get preliminary terms for a home equity agreement. If you decide to move forward, you fill out an application and upload a handful of supporting documents. Unlock will then review the application, order third-party reports, and complete underwriting. The whole process takes around 30 days from start to finish.
One component that sets Unlock apart from other home equity companies is its high LTV ratio of 80 percent. Higher LTV ratios generally mean higher financial risk for the lender, allowing homeowners to qualify for even more money. Other comparable companies have LTV rates of around 70 percent to 80 percent. Unlock exceeds the industry standards in LTV rates — a major benefit to a homeowner.
Most shared equity companies accept clients with poor or low credit scores. The industry standard lands around 600. Unlock, along with a few other major home equity businesses, accept clients with credit scores as low as 500. This means more people, whatever their credit history may be, can build their home equity.
The industry average for term agreements usually falls around 10 years. However, there are other firms that offer longer terms, even up to 30 years, which may better fit the needs of some homeowners.
Unlock opened in 2019. Compared to other home equity sharing companies, Unlock is fairly new to the industry.
Currently, Unlock offers its home equity agreement in 15 states:
Residents in states not listed above will not qualify for Unlock’s services.
3 weeks ago
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Jan. 3rd, 2023