March 20, 2019

Is A HELOC A Good Fit For Me, Or Is There An Alternative?

Many people looking at Unison HomeOwner also check out HELOCs and other traditional options. Because no two individuals or situations are exactly the same, you need to know your options and make the decision that best fits you and your needs.


So, what exactly is the difference between a HELOC and Unison HomeOwner co-investment?


As you may know, HELOC stands for home equity line of credit, and it’s a type of capital (debt) you can access by putting up the equity in your home as collateral. The most fundamental difference between Unison HomeOwner and a HELOC is that a HELOC is debt, and HomeOwner isn’t.


Once a lender issues you a HELOC you can borrow against it at any time. You pay interest on what you borrow, and your line of credit terms will determine when you need to repay the balance in full. Contrast this with Unison’s HomeOwner, which invests with homeowners and eliminates the need for new mortgages, monthly payments, and interest charges.


HELOCs could a good option for people who want the flexibility of being able to borrow money when they want without having to deal with a large lump sum of cash all at once — and who also want the flexibility of repaying the money they borrowed on their own terms. However, some folks don’t want the additional costs of more debt on top of their existing mortgage loan. They don’t like the idea of having additional monthly payments. For those homeowners, Unison might be right.


Unison HomeOwner will pay you up to $500K or 17.5% of your home’s value as a home co-investment. This is a one-time payment with no interest. Once approved the homeowner receives the payment to use however they like. After all, it’s their cash. Unlike a HELOC, HomeOwner has no monthly payments and no interest. In exchange for helping leverage their equity; customers provide Unison with a share in the appreciation of the home when they decide to sell, buy Unison out or 30 years pass. Because it’s a home co-investment, both the homeowner and Unison benefit if the home increases in value over the period of the contract, and both share in the loss if the home decreases in value.

What Are Some Other Alternatives To A HELOC?

HELOCs aren’t the only alternative to Unison HomeOwner. There are also home equity loans, home improvement loans, and cash-out refinancing. While these might work in a specific case, for people looking to avoid monthly payments and interest they won’t be right. Depending on the loan, you may need to be prepared to pay a higher interest rate or extra fees or closing costs. You also may need to have a certain amount of equity in your home, something not everyone can manage.