Unlock Home Equity Review – Is an HEA Worth It?

Unlock Technologies is a financial services company founded in 2019 that provides home equity agreements (HEAs). These agreements give homeowners immediate cash in exchange for a percentage share of the home’s future value – all without additional monthly payments or changes to their current mortgage. 

Unlock Home Equity Agreements

Pros

• No minimum income to qualify
• Accepts credit scores as low as 500
• Doesn’t change or increase your current mortgage payments
• Flexibility in what you can do with the money  

Cons

• Only available in 14 states
• HEAs are only offered on a 10-year term
• Higher than average origination fees

Highlights

Loan Amount: $30,000 up to $500,000
Minimum Credit Score: 500
Funding Time: 30 to 60 days
Monthly Fees: No monthly fees, but you’ll have to pay up to 4.9% in origination fees plus third-party closing costs.

Is Unlock Legit?

Yes. Unlock is a legitimate company with an A+ rating from the Better Business Bureau (BBB) and an average of 4.7 stars on Trustpilot. However, that doesn’t mean that Unlock’s services will be right for everyone. Many homeowners can benefit from working with Unlock, such as those with lower-than-average credit scores or fixed incomes.

On the other hand, if you believe your home’s value will increase substantially or if you have a high enough credit score to secure a home equity loan or line of credit, that may be a better choice.

Unlock HEAs are available in 14 states: Arizona, California, Colorado, Florida, Michigan, New Jersey, North Carolina, Oregon, Pennsylvania, South Carolina, Tennessee, Utah, Virginia, and Washington state.

👉 Get started with an HEA from Unlock!

How Does Unlock Work?

Traditionally, there were only a few options for tapping into your home’s equity: refinancing, getting a home equity loan, or getting a home equity line of credit (HELOC). However, there’s a newer option called a home equity agreement that’s not actually a loan. Instead, it’s a financial agreement you make with a company to receive a lump sum cash payment immediately, and in exchange that company is entitled to a portion of your home’s future value.

👉 Related reading: Hometap Review: Get Cash from a Home Equity Investment

Unlock’s HEA comes with a 10-year term, after which time you’ll have to either sell your home or buy out Unlock’s share. You can also sell or buy back the company’s interest any time before the 10 years is up, with no penalty. The amount you’re able to receive is based on a few factors including the amount of equity you have in your home, its current value, your credit history, and whether there are other debts or liens on the property.

Most homeowners will typically owe Unlock twice the percentage they initially received, and on average people can receive anywhere from 5% to 35% of their home’s equity. For example, if you received 10% of your home’s current value, you’ll owe 20% of the home’s future value when you sell or buy back Unlock’s share.

👉 Get started with an HEA from Unlock!

Unlock Home Equity Requirements

Although Unlock’s HEAs are available to many homeowners who don’t qualify for a traditional home equity loan or HELOC, there are still some requirements you’ll need to meet: 

Minimum Home Value: $175,000 to $3 million

Property Type: Residential properties including single-family, multi-dwelling units, condos, and both owner occupied and non-owner occupied properties. Note that rental and investment properties may be subject to higher pricing.

Property Condition: All properties must be appraised and earn a C4 rating or better, meaning the home has been adequately maintained and exhibits normal wear and tear.

Minimum Credit Score: You need a credit score of at least 500, but homeowners with scores of 500 to 550 may have to meet additional eligibility requirements including income verification or being required to pay off some debts with the money received.

Financial History: You must have no bankruptcies or foreclosure actions within the last five years and be free of certain delinquencies on your mortgage.

Debt-To-Income (DTI) Ratio: Your DTI is the amount of regular debt you owe compared with your gross monthly income. Unlock doesn’t have a set DTI, but homeowners with a DTI of over 45% (meaning 45% or more of your monthly income goes toward debt), may have more trouble qualifying.

Loan-To-Value (LTV) Ratio: Unlock doesn’t stipulate a minimum LTV (its website only states you should have a “sufficient” LTV) but does have a maximum LTV of 80%. Essentially, the more equity you have in your home the more money you’ll be able to get.

👉 Related reading: Truss Financial Group: Non-Traditional Mortgages

All of Unlock’s HEAs have a maximum 10-year term. However, you can sell your home or buy out Unlock at any time you like without penalty. At the end of the 10 years if you haven’t settled up with Unlock, you’ll either have to sell your home or buy back Unlock’s share based on a third-party appraisal. 

Unlock is currently only available in 14 US states: Arizona, California, Colorado, Florida, Michigan, New Jersey, North Carolina, Oregon, Pennsylvania, South Carolina, Tennessee, Utah, Virginia, and Washington. Once you start the application process, most homeowners can expect to get funding within 30-60 days.

👉 Get started with an HEA from Unlock!

Unlock Home Equity Fees

With any real estate transaction, there are certain required fees and these have to be paid to both Unlock and various third-party providers. However, unlike a traditional HELOC or bank loan, you won’t have any additional monthly payments or interest. To get a better idea of what you can qualify for and what you’ll owe in return, you can use Unlock’s free calculator: .

Origination Fee: Unlock typically charges an origination fee of 4.9% of the investment payment. So, if you’re receiving $50,000 from Unlock, you would have to pay $2,450 upfront or have it taken out of your total payment.

Unlock Share: The Unlock Share is the largest payment you’ll be required to make and this is the percentage of your home’s future value that you’ll owe in exchange for the upfront cash. For example, if your ending home value is $500,000 and the Unlock Share is 20%, you would have to pay $100,000 when you sell your home.

Administration Fees: This is not a set dollar amount, but Unlock states it may charge “a reasonable Administration Fee for processing your Settlement Event.”

Third Party Fees: The homeowner is typically responsible for paying third-party fees which can include recording, appraisal, inspections, escrow, titling, and closing costs. Additionally, depending on the condition of your home, Unlock may require you to pay for improvements or maintenance adjustments.

👉 Get started with an HEA from Unlock!

How To Apply for an Unlock Home Equity Agreement

Applications for Unlock’s home equity agreements can be done entirely online. Start by entering basic information about yourself and your home so Unlock can perform a soft credit check. This will not affect your credit score and you’ll get an instant estimate within minutes. After this, you can begin the application process online, though you’ll be able to contact a home equity consultant (HEC) should you have questions.

Next, an independent title report and appraisal will be ordered and reviewed before you receive your official offer. If you accept the offer, you’ll need to sign closing documents before your payment is released by wire. For most homeowners, this entire process should take 30 to 60 days.

What Do Homeowners Say About Unlock?

Home equity agreements haven’t been available to consumers for very long, and since Unlock is a relatively new company, it doesn’t have the same track record as other financial institutions. That said, even in this short time it’s accumulated several positive reviews.

Here are what two reviewers from Trustpilot had to say about their experience with Unlock:

What Are Some Alternatives To Consider?

An Unlock HEA won’t be the right option for everyone and there are several alternatives you should consider:

Home equity loans: If you have substantial equity in your home and a good credit score, you may consider a traditional home equity loan (also called a second mortgage). With this type of loan, you’ll get a lump sum payment backed by the equity in your home. These are typically fixed-rate loans that you’ll make regular monthly payments on over a set term.

Home equity line of credit (HELOC): Like a home equity loan, a HELOC also allows you to borrow against the equity in your home, but instead of a lump sum payment, you’ll have access to an open line of credit that you can use as much of or as little of as you want. You’ll then only have to pay back the amount you borrow.

Personal loan: If you’re not able to use your home as collateral (perhaps you don’t have enough equity in it, or there are liens against it that prevent qualifying for a new mortgage), you can consider a personal loan. Personal loans are usually easier to get than mortgages, but you may not be able to borrow as much as you need and it will likely come with a higher interest rate than refinancing.

Cash-out refinance: If you’re able to secure a lower interest rate than your current mortgage, a cash-out refinance could be a good alternative. With this option, you won’t be adding a second mortgage onto your first; rather, you’ll refinance your first mortgage for a larger amount than you owe on your home and receive the difference in cash.

Credit cards: Using credit cards is a quick way to get cash fast, but they often come with high interest rates and limits on how much you’re able to access. However, opening a credit card will give you flexibility since you can choose to only use as much as you need and pay it off as you go.

How To Contact Unlock

Contact Unlock by phone at 1-800-560-3450, or by email at [email protected].

Is an Unlock Home Equity Agreement Right for You?

Unlock is a reputable company that offers homeowners a solid alternative to tap into the equity of their homes. Those who need to access cash, but can’t qualify for more traditional sources of funding can benefit from a home equity agreement from Unlock.

That said, the trade-off for getting cash upfront is a hefty payment down the line, so you should seriously consider whether or not it will be worth it in the end.

👉 Get started with an HEA from Unlock!