August 23, 2021

Should I use Home Equity for Home Improvements? Consider this


By Jia Taylor, Content Marketing Lead

Sherry M.* and her husband love their home in Damascus, Oregon. They have lived there for nearly 10 years, but are the first to admit that their home needs major renovations.

“Although we love it dearly, it's almost 100 years old,” says 73-year-old Sherry who is retired. “We've had to invest in major updates, such as a new roof, new gutters, plumbing and electrical repairs.”

Sherry and her husband started their own business in 2013, and plan to stay in their family home for a long time. To fund their home improvements, they took out a home equity line of credit (HELOC), but the loan was not enough to cover all of their expenses.

“Our monthly budget didn't have a lot of wiggle room and we worried about covering future emergencies,” Sherry says. “At the same time, the value of our home had almost doubled since we purchased it and we were beginning to look around at refinancing or other options that might help us gain a little breathing room.”

Hesitant to take on more debt, Sherry says that’s when they learned about Unison’s home co-investing program.

“After doing a lot of research, we decided that equity-sharing was a good solution for us,” says Sherry. “We could access the unused equity in our home without having to make monthly payments, and the already accrued equity would always be ours.”

With a co-investment with Unison, homeowners receive a cash payment up front in exchange for an option to share in the home’s future change in value.

Home Improvement Booms During COVID-19


2020 was a record-breaking year for home improvements. Harvard University researchers found that Americans spent nearly $420 billion on home improvement projects during the COVID-19 pandemic.
In a 2021 State of the American Homeowner Report conducted by Unison that surveyed 2,000 homeowners in the U.S., homeowners are, not surprisingly, using their homes as offices, gyms, schools, and much more due to the pandemic.

The study found that nearly half (45%) of homeowners polled were planning a home improvement project during 2021 to make their home more comfortable, and 72% of those who refinanced in 2020 are planning an improvement in 2021. Thirty-three percent of mortgage-holding homeowners would tap into their home equity for a renovation or improvement—a significant increase from pre-pandemic times when 21% said the same.

While many Americans realized a need to upgrade their space, a surge in home prices and shortage of homes for sale limited the choices available, leading millions of Americans to tap into their home equity to fund big costs like renovations.

Sherry is one such homeowner. After she decided she was better off updating her home than buying in this year’s heated market, she said Unison was the solution for her family.

“After we signed with Unison, we were able to pay off all our bills, our credit scores zoomed up, and we have been able to keep our debt-load low,” says Sherry. “We even used some of the proceeds to give cash gifts to our children, which was a great feeling.”

By the end of last year, roughly 46 million homeowners held a total of $7.3 trillion in equity to tap, the largest amount ever recorded, according to Black Knight, Inc.

Still, tapping into home equity to pay for home improvements can pose a challenge when trying to use debt-financing.

Since the start of the pandemic, several banks stopped offering HELOCS altogether to lower their exposure or risk during uncertain economic conditions. Other factors to consider when it comes to traditional forms of accessing your home equity such as a HELOC, cash-out refinance, or a home equity loan are monthly payments and interest, which are usually required to repay the loan.

How Unison Works


Unlike a loan, Unison offers a debt-free alternative to accessing your home equity by investing in your home alongside you, without monthly payments or interest charges.
Unison can provide cash of up to $500,000, or up to 17.5% of the value of your home, which you are free to use however you want for up to 30 years. In return, when you sell your home or 30 years pass, Unison will share in the profits if your house increases in value. On the flip side, if it goes down in value, Unison shares in the loss.

How much you take out depends on your financial situation. If you are using the money for something like home improvements, paying off high-interest debt, or investing in your business, then using Unison to tap your equity could make sense.

“You need to do your homework to make sure equity-sharing is a good fit for you, but we have been very happy with the program, as well as the great customer service and assistance when we have questions,” Sherry says.

*For privacy purposes, Sherry’s last name has been omitted.