Unison Homeowner Equity Access is Probably a Terrible Idea!

While researching different ways to access home equity for my last post on hacking your mortgage into a high interest savings account, I came across an interesting company I hadn’t heard of before. This company, Unison, offers a way to access the cash tied up in your home equity without any interest charges or monthly payments! Sounds great at first glance, but of course there is a catch to go along with it. That catch is that they are effectively “investing” in a portion of your home and will take a share of any appreciation or depreciation when you eventually sell (or at the end of 30 years if you still live there).

This seems like a pretty fair trade at first because you’re getting access to a large amount of cash without immediately paying anything for it (aside from opening fees), but it’s important to take a look at the fine print and calculate how much this eventual appreciation might amount to. I’ll crunch a few possible scenarios below and you can decide for yourself whether a Unison Homeowner equity loan is something worth thinking about. When it comes to

How the Unison Homeowner Equity Loan Works

I won’t cover every single detail of how the Unison Homeowner program works, but here are the details I deemed important:

  1. Unison will give you a cash amount worth between 5 and 17.5% of your home’s value, so long as that amount doesn’t put you at more than an 80% LTV ratio against the home.
  2. There will be no monthly payments or interest charges on the loan.
  3. When you decide to sell your home, Unison will share in the appreciation or depreciation of the house as well as take their initial loan amount out of the sale price.
  4. Unison’s share of the change in value is equal to 4 times the initial loan amount. For example, a loan of 10% of the home’s value would mean Unison gets 40% of the change in price.
  5. If your house sells for more than it was appraised for at the time of the loan, Unison will take the initial loan amount plus their share of the price increase.
  6. If your house sells for less than it was appraised for at the time of the loan, Unison will take the initial loan amount minus their share of the price decrease.

Those are the basics laid out front and center on the Unison Homeowner’s webpage, but there are few additional items to keep in mind:

  1. There will be an immediate 3.9% transaction fee on the amount loaned.
  2. If you decide to sell your home within 3 years, Unison will not share in any depreciation and other special provisions apply.
  3. After 3 years, it is possible to buy Unison out of the deal by paying back the loan plus change in home value as determined by an appraisal.
  4. Home Improvements made on the home can bring up the “cost-basis” of the home as determined by an appraisal.
  5. If you do not maintain the property, Unison may take a “Deferred Maintenance Adjustment” to make up the difference as determined by an appraisal.
  6. If you don’t sell the house within 30 years of taking the loan, Unison will take their loan back and their share of the property value change as determined by an appraisal.
  7. Unison cannot be used with rental properties, you will need to buy Unison out first if you want to convert your current home to a rental.

It definitely starts to get complicated if you consider all possible outcomes of your future home, so let’s stick to a possible standard use of the loan.

How Much Is The Share of Appreciation Really Worth?

The main selling point on this particular type of loan is the lack of traditional interest and monthly payments. While that probably sounds great to a lot of people trying to access money from their home, my first instinct is to try figuring out where they are getting their money from. Hopefully that’s your first thought as well when you think about getting into a deal that looks great on the surface.

Setting aside the 2.5% upfront fee and additional closing costs, the primary way Unison is making their money is on home values appreciating over time. What isn’t clear until you run the numbers is how much that’s actually worth.

Of course we can’t predict the future of home values, but we can look at the historical average and see where that falls to at least get a starting point.

Based on data from the Federal Housing Finance Agency’s Housing Price Index, we can look at average home value changes over time. Here’s a description of the index if you’re curious:

“The HPI is a broad measure of the movement of single-family house prices. The HPI is a weighted, repeat-sales index, meaning that it measures average price changes in repeat sales or refinancings on the same properties. This information is obtained by reviewing repeat mortgage transactions on single-family properties whose mortgages have been purchased or securitized by Fannie Mae or Freddie Mac since January 1975.

The HPI serves as a timely, accurate indicator of house price trends at various geographic levels. Because of the breadth of the sample, it provides more information than is available in other house price indexes. It also provides housing economists with an improved analytical tool that is useful for estimating changes in the rates of mortgage defaults, prepayments and housing affordability in specific geographic areas.”

As you may already know, housing prices and their changes vary wildly depending on where you live. Despite the obvious downside of using a broad average of the US, it should do for our example calculation here.

First, I pulled down the data from this link that summarizes the index for each of the 9 regions as well as the overall USA. Then I applied a simple CAGR formula to the start and end values of 1980 to 2017 to get an average annual growth rate of 3.73%.

Now we have to use that average growth rate to figure out how much effective interest we’re paying on this “interest-free” loan. Let’s use an example where you pulled 10% of your equity out of your house in cash in exchange for giving Unison a 40% share in the appreciation. That means Unison would be entitled to 40% of the average 3.73% growth each year or 1.49% of your total home’s value annually. As the loan was for 10% of the home’s value and Unison will make an average of 1.49% of the home’s value each year, that makes the effective interest rate 15%!

As the ratio of loan to share of appreciation is 4:1, the actual amount taken out (between 5 and 17.5%) doesn’t change the effective interest rate.

15% is a huge interest rate compared to the other options available for accessing home equity!

Other Options for Accessing Home Equity

While the “no interest, no monthly payments” loan might sound appealing, there are much cheaper ways to access that money in the long run such as:

  1. Cash-out Refinance
  2. Home Equity Loan
  3. Home Equity Line of Credit

In fact, the effective interest rate is so high, it would probably make more sense to just get a personal loan from a bank, credit union, or one of the fancy peer to peer networks!

The Breakeven Point of a Home Equity Loan vs. Unison Homeowner

While the 15% I calculated above is huge, it was based on a broad average that won’t apply to everyone. Maybe you live in a specific part of the US in which you think property values are pretty stale and can’t even keep up with inflation. Let’s calculate how little the appreciation has to be for this type of loan to be comparable to a more traditional Home Equity Loan.

First, we need to start with the interest rate of the Home Equity Loan. While it will vary by bank (+ credit score and other factors), a little bit of personal research revealed that it wouldn’t be difficult to lock in a fixed interest rate 1 or 2 points above the prime rate (4% as of writing) for a traditional Home Equity Loan. With a little bit of effort, you might even be able to find something lower, but we’ll take the conservative estimate on the higher end of what I found: 6% fixed.

Now we just have to reverse engineer the equation we used above to get the yearly property appreciation that would give us an effective interest rate of 6%. This number comes out to 1.5%.

So if your best option for getting home equity out with a traditional loan or refinance comes out to 6% AND you expect your home to appreciate less than 1.5% each year (less than inflation in most years), a Unison Homeowner loan could be right for you. Just don’t forget about the fees to get the loan started and the additional constraints you have regarding your home going forward.

When a Unison Homeowner Loan Might Make Sense

Given the very high effective interest rate on the average appreciation case, a Unison equity loan probably won’t make sense for most, but here are a few situations I think it might.

  1. If you are very confident that your house’s value is moving sideways or down, and that means not even keeping up with inflation (and Unison thinks the opposite).
  2. If you want to bet against the value of your home going up (while still maintaining a perfect maintenance record).
  3. If you can’t get approved for traditional equity access or a personal loan, but still need access to cash (seems unlikely).

Personally, I can’t come up with anything else. Can you think of a situation where this type of loan would make sense for the average person as opposed to the alternatives?

Why It Definitely Doesn’t Make Sense For Us

We bought a townhouse in Seattle a few years ago and the market has been on fire since then. Based on what we paid 3 years ago and our current Zillow estimate, the annual rate of growth on our property has been over 15%! I obviously don’t expect this to keep up forever, but I also don’t see it slowing down in the near future. There are a lot of people moving into Seattle and the rate that new housing is being built hasn’t been able to catch up yet.

If we assumed an average of 15% growth over the next 3+ years, we could end up paying an effective interest rate of over 60% on this type of loan!!! It’d be cheaper to just max out the cash advance limits on all of our credit cards if we were really strapped for cash!

Luckily, we’re not in the market for any kind of loan at the moment, so this has purely been a thought exercise.

If there’s any lesson here, it’s to not be fooled by any flashy advertising, always read the fine print, and be sure to always consider comparable options that may be cheaper.

Thanks for reading and hopefully someone thinking about a Unison Homeowner equity loan stumbles upon this post before pulling the trigger. Depending on where you live, it could end up being the most expensive loan you’ve ever taken!

288 thoughts to “Unison Homeowner Equity Access is Probably a Terrible Idea!”

  1. After reading your article, there is one scenario that is not addressed. My daughter wants to buy her first condo. We would be giving her half of the down payment. Our financial advisor says this will be more of a gift than any investment benefit for us. Thus, we thought she should use this service so it does not tie up our funds and they can stay in our investment portfolio. It seems like a good option for her rather than paying rent and receiving no equity on any property. By the time she sells, she hopefully will be more established in her career and she will still get some profit so that she can finance a next home the traditional way. Thoughts?

    1. Hi Sherry, it looks like you’re deciding between several different things at the same time.

      1. Should your daughter buy a house at all?
      – You mention “It seems like a good option for her rather than paying rent and receiving no equity on any property”. This is not the proper way to evaluate renting versus buying and the correct answer highly depends on the local market she is looking to buy in. Renting can be the financially smarter move in some cases, especially if you don’t have a full down payment. On the other hand, buying even with PMI can also make sense in the right market, it’s very location dependent. Here is a powerful tool from the NYT that can help make this decision more clear:

      2. If it makes sense for her to buy a house, should you gift your daughter half of a down payment?
      – This is completely a personal decision, but as you’ve been advised, it has to be a gift in most cases for her to still qualify for a mortgage. This means it no longer belongs to your investments, but it will help your daughter out significantly in the long run because she’ll avoid PMI and/or sharing any appreciation on the property.

      3. If it makes sense to buy a house, and you choose not to gift her half of the down payment, should your daughter take out a Unison loan?
      – If she is buying in a market that is likely to appreciate in the coming years, then taking out a Unison loan can be very expensive. (If she is not buying in a market that is expected to appreciate, I would re-evaluate the rent versus buy decision again.) As I calculated above, just having average appreciation on a home means the Unison loan works out to an effective 15% interest rate every single year. This is extremely expensive compared to most alternative ways of funding a home, including putting down 10% or less and paying PMI.

      The biggest decision you need to make is whether or not to gift the money. I doubt you plan to get ~15%/year return on your investments, so the money would be better used towards the down payment. This is IF it makes sense to buy at all, and IF you are okay giving those returns to your daughter instead of keeping them for yourselves.

      The short answer is No, this scenario does not make a Unison loan make sense.

      1. Noah, I can’t thank you enough for this very informative blog post and your knowledgeable responses to comments! Just got a Unison mailer myself and I found it to be very… not clear (i.e., deceptive and misleading). Being a professional, I can’t imagine how the average person receiving this type of “offer” would be able to really understand what they are potentially signing up for when I had so much trouble myself! My biggest issue with their marketing is that they are clearly trying NOT to inform homeowners that this is a LOAN. They do this by repeating over and over again that this is an “investment.” By calling it an “investment” instead of a “loan,” they don’t have to do what you did (which the average lay person wouldn’t know how to do), which is calculate and disclose the true cost of the “loan” to the homeowner. It also suggests to the homeowner that Unison is “sharing in the risk,” which is what investors usually do, unlike secured creditors, which is what Unison actually is. In conclusion, shady as heck. I’m out.

        1. I think the calculation is off in the return figure for Unison at 15%. If you borrowed money, you have a monthly payment still and that is money out of pocket, correct? So if you calculate the total monthly payments you would be out of pocket over 3 years on a $80k HELOC at 6%, I believe to lose 15% of the future equity, the home would have to appreciate significantly. When comparing cost of borrowing on a Unison equity share vs costs on a loan, you have to fully amortize out the payments on a HELOC payment and add that up to compare the end cost of an equity share program. So over 3 years on a HELOC you may spend $14k out of pocket. At the end of 3 years if you want to buy Unison out, you have to calculate if that will be more than or less than $14k. If it is less, this makes sense, if it is more, you just keep the Unison loan longer to see where home values go and settle when your value is lower?

    2. Be careful that Unison will tilt this deal in their favor by controlling the valuation at the beginning and end of their deal. If they undervalue the house at the beginning it ups their percentage of equity they are ‘giving’ you and also increases the spread at the end of the period. From what I read the valuation at the end is not necessarily actual selling price but the valuation at time of sale. They then overvalue the house to get a bigger piece of the pie.

      I have no experience with them to say they actually do this, but this type of deal is ripe for unsophisticated homeowners to be taken advantage of.

      I also don’t see where their lien falls in the event of bankruptcy or do they prevent any additional debt or refinancing.

      1. chances are, they are listed as the first mortgage holder,,which means a title search would force payment at settlement… the key to this type of loan would be making sure the valuation at the beginning is on target with correct value . im 52 so im really not worried about the 30 year value,, as far as inheritance goes,, they can count their lucky stars they are getting something. buying my Porsche now . ttyl

      2. Appraisals are done by a 3rd party, not by Unison, the same as any other loan. I’ve been a real estate broker for 14 years and I’m in the middle of this with unison. The appraised value came in within a grand of the numbers I have on my computer. From 14 years experience the reason the appraisal might seem low is simply because every owner I’ve ever spoke with overvalues their property significantly. If all you ever see is the asking prices around you and base your opinion on that, you’re over value in your mind compared to reality.

        I wouldn’t do a loan just for the money, it’s still debt that has to be repaid eventually. I wouldn’t do the loan to buy a car or anything silly like that. My family moved across country, incurred some debt. Doing the math using the average appreciation of our area and a 3 year target, our bill minimums exceed what we will be paying unison at the end. And we would still have the debt to pay in 3 years. So cash out, pay off, and pay back in 3 years. We’ll be money ahead. For our situation, the math plays out. YMMV

  2. I suspected that this home equity plan by Unison was a bad idea when I received a mail advertisement about this a few weeks ago. This fits under the old adage”If it sounds too good to be true, it mostly likely is”. Unless one lives in an area with extremely low housing demand, most likely their house will appreciate in value well beyond 1.5%. It is subtle because the money does not directly come out of one’s pocket, but they are indirectly gaining a huge amount of interest based on the appreciation of the house’s value.

  3. I am an older adult and I may not be alive in 30 years. I am trying to increase my quality of life now. I am still contemplating on doing this.

    1. Why not consider a traditional reverse mortgage? You could pull out much more than 10-17.5% of your equity.

      1. My home value is at about $550,000 and I owe $289,000. I’ve been told that the loan is too high to qualify for a reverse mortgage. I am 69 and still working. My credit is at 798. Through unforeseen circumstances, I either have to keep working, sell my house and move or have an influx of cash somewhere. I was considering this Unison option.

        In case you all don’t know, the Trump Administration removed the cash back aspect of the reverse mortgage last October, though advertisers are not telling us this yet. Reverse mortgages will continue to allow you to stop paying monthly mortgage payments, but will no longer allow you to get cash back from your equity – while your house depreciates (from enormously high interests costs each year. I know, because it totally screwed my wife and I when we had invested, expecting to be getting cash back.

        VOTE!!!!! these greedy wealthy thieves out, come November.

      3. Problem with reverse mortgage is that you equity must be 60% of your home’s value or you have to make that money up yourself..it can be very costly!

    2. This is a scenario not covered by the article. I see value in this type of loan as I approach retirement. I’m borrowing against that future equity that I cant take with me when I die… probably before the 30 years are up.

    3. Why not get a home equity loan or refinance your mortgage. Why put an investor on your mortgage who may still the equity from your home?

  4. Would this make sense if I am planning on selling my house within the next 2 years? Could use the money now.

    1. “If you decide to sell your home within 3 years, Unison will not share in any depreciation and other special provisions apply.”
      If your home loses value, you will still owe Unison the full loan amount.
      After 3 years and you take a loss when selling your home, Unison will take a loss as well, but will still take the 10% or so of the final sale price.

  5. Yeah, that’s what I was thinking. If I do not expect to be alive in 30 years and I could use the cash to pay… I don’t know, my kids’ student loans… I get it, they are not going to be as much off my house as otherwise but, on the other hand, paying back student loans is always a beach, so to speak.
    So, at this point, my only question is: how legitimate are these people? And what is going to happen if they go out of business?

  6. Noah, great thread but SOOO confusing. My husband and I did an application with Unison in March 2018 but backed out. We spent $ 2000.00 to have an excellent tax/real estate lawyer review their contract (78 pgs) and he basically said that as along as we understood the numbers we could proceed. Nothing shady. However, what we discovered in the process is that although they use “independent 3rd party” appraisers, our house appraised at over $ 100,000 below it’s current value. THIS IS THEIR GAME! We fussed with them about this and they actually returned out $ 2000.00 legal fee which was very generous but they said there would be not negotiating the INITIAL Assessed value because their investors did not want to….that’s pretty much a quote. We live in Brooklyn NY. I bought my house for $ 212,000 and it is now worth $ 2,500,000. Unison is only interested in certain zip codes where housing prices do not fall into ‘normal’ predictions..ie, SF, Chicago, NYC…for example.

    We felt that Unison was an option because at 62 we are underemployed (unexpectactly) and it seems that no one is hiring us…though we seek employment everyday. Agism is real! We have made an incredible amount of money on our house in the 25 yrs we have lived here which would not be touched by Union. They are only interested in future appreciation. Thirdly, having this money would mean we could stay in our home for another 5 years which is the plan. We have looked into Reverse Mortages and told by our financial advisor to not do them. We do not qualify for any home equity loans at any interest rate because they want to see income. To downsize in NY would actually be more expensive even for a simple apartment which averages $ 2000/ month. And to downsize to the boondocks feels very sad and isolating. Yes, Unison is expensive but some of us have go no other choice but to sell and move far away . My family is in this area. The whole thing is just plain sad that at our age we cannot get work. After backing out of the application we are actually now at a point where we may re engage Unison…try as we have there are simply no other options but downsize upstate somewhere away from what we love.

    1. Sorry for your predicament, Angela. I understand there is another company that does this kind of thing (https://point.com/) that maybe would provide a better experience. Hope you find a job soon.

      1. Mary, both POINT and PATCH do not service New York yet….Unison and Home Tap do, however

    2. I was interested in this option and am a 76 year old woman with a Finance degree so I started the process. I was looking for the catch and figured the appraisal would probably be the most likely culprit. This would be especially important because my loan would not be a “30 year” plan.
      Sure enough, the appraisal came in $32000 below city assessment and $26000 less than an appraisal I had done when I applied for a home equity line of credit two years ago (before installing a $15000 new roof). They offered to do a second appraisal and average the two, but if I still turned down their offer I’d have to pay for half of the appraisal. I may be 76 years old but I’m not senile. Beware!!!

      1. Cecilia Giefer, thank-you for sharing your experience! Very eye-opening for me and I’m sure it will be helpful for others looking on the internet for information about Unison.

      2. Thanks for your opinion! I’m a 1st time homeowner and got this in the mail. The Appraisal value was the unknown that was bothering me. I think i’ll Pass.

        1. Hi Angela,
          I’m in your same predicament with age and employment. Curious to know if you went through with Unison.

    3. Why don’t you try to Airbnb parts of your home. I live in Brooklyn and make approximately 50,000 from renting my basement and sometimes the top floor. There are other ways for you to make money other than dealing with crooks. Be careful!

    4. Amen, Angela. Unison recently tried to lowball me concerning my townhouse by over 100k

    5. Hi Angela, did you get a chance to see the appraised value BEFORE you signed the final documents committing to do the deal with Unison? Seems to me that the Unison product might be a good deal for some situations–but only if you get a chance to review the appraised number at the beginning and make sure that it is a fair valuation. I’m afraid of Unison selecting the appraiser and then the appraiser wants to be selected by Unison again so they provide a valuation that Unison likes. Hmm? Thanks.

      1. my appraisal actually came in higher than I expected and yes all the numbers are disclosed before signing….Im still reviewing the agreement , but I think Im about ready to sign.

  7. Angela. It seems a HELOC is your best option with a10 year, interest only drawal period. And, you would have access to a lot more cash. (Probably enough to pay the interest payments)

    1. Grant…can’t get a HELCO without proof of employment income…we are 62 and underemployed…unexpectedly…my husband’s position was to go another 5 years but his employer brought in a younger guy and you know the rest of the story…it was brutal

  8. Thanks for the explanation and number crunching Noah, this helped me make sense of this new type of loan. I don’t think I will be pursuing it, so thanks again for the research.

  9. I was considering Unison and my research on their site shows the 4:1 equity take from them. Too Much!! Though for some people in a complicated situation it may be worth it to them. However, I also ran across a company call Point – they offer a similar program but cap their take depending on how long you take to repay the loan. For some of you above thinking you are willing to take the plunge in spite of the cost with Unison, please check out the Point program at https://point.com/calculator. Hope that helps someone.

  10. What about for the purpose of paying off “high” interest student loans (5.5-7%), and then putting the cash that would have gone to those loans
    & interest in high-yield savings/ investments?

    1. As I broke-down above, a Unison loan has an effective interest rate over 14% in an average housing market! That’s an extremely high interest loan, especially compared to your student loans, so a Unison loan would most likely not make sense in your case.

      Borrowing money at ~14% interest to pay off a loan at ~7% interest is never a smart decision.

      1. I’m still not convinced that it is ALWAYS a bad idea. There is a difference in total cost between the compound interest of a student loan and the “one time interest” of the Unison investment recovery. It is risky, but under certain circumstances, one would end up paying out more in student loan interest than one would pay Unison when selling a home.

        1) House is sold 5+ years from payout date
        2) Payout is used to pay off student loans that cannot/will not be paid off early
        3) Majority of money that once went to student loans in put in high-yield savings/investments for future down payment and/or back into home equity…aka recouping payout
        4) Unison does not undervalue the home at time of payout (a known issue)
        5) Home value does not skyrocket

        For example, with the student loan debt in my family, we would be paying approximately $22,000 in interest in the life left.

        Assuming a high 3% value increase in our home in the five years, that would max around $25,000 value increase. Unison takes 40%, of that $25k, so about $10,000.

        $10,000 to Unison versus $22,000 … $12,000 – transaction fees = approx $10,000 in savings.

        Is there anything missing in my logic? Let me know!

        1. The effective annual interest rate I calculated (~14%) is compound, not “one-time” as you mention. Even though you aren’t making payments along the way, the amount you end up owing at the end is growing in a compound fashion every year. If you hold the loan for 5 years with average home value growth, the “one-time” interest would be about 93% of the initial loan amount.

          Also, the average growth of homes in the US is 3.73% per year, so your 3% estimate is low unless you know your local market better.

          I can’t check your math because you didn’t include your home value or expected loan amount, but the 3% number (annual growth or after 5 years?) along with the $25k seems off for a loan amount that would save you $22k in interest. If you can provide your home value and how much you expect to pull out, I can take another look.

      2. we are in the process of applying at UNISON, we are retired and have substantial equity in the house.
        Aprox. $600,000.00; we were considering selling but would probably have to leave the Bay Area. We are looking at this option because the debt does not need to be serviced and presuming the appraisal is authentic we should be able to protect a substantial amount of the equity already established for our heirs.

        we plan to take the money to pay off the existing mortgage allowing us to remain in the house and allow the cash flow from Social security and our other investments to offer us a very nice retirement. we also feel that this market has hit a top and that returns going forward will be much smaller than in the last 10years.

        1. Hello Dave,

          I’m in the same situation as you; I live in Mill Valley. It all sounds good to me, I’ve had only a good experience so far with the Unison representative, and I’ve got an offer from Unison. The contract language confuses me, though. Unison is granted an option to purchase a percentage interest in the home. My concern is that somehow that will mean that Unison ends up getting a percentage of the sale price, not the difference between the current appraised value (which I thought was fair) and the sale price when I sell (I probably won’t be selling; my heirs will be selling). Have you contacted a lawyer about the language or do you have any thoughts on this issue?

          1. Diane
            I am also in the bay area, and in a similar situation, thus I spent the last hour or two on the Unison website, and found all the information I could possibly want without talking to someone live. The website has many tabs and sections that answer most questions.
            The option to purchase is a technical way of them getting their share at the end contract. It appears to be as they said based on the value at the beginning of the contract, equity built before that point is yours, you share the percentage you agree to of the future equity only going forward. Not the equity you already have when you begin with them. The original article by Noah, and is subsequent comments are somewhat confusing and incorrect because there is no interest, and he keeps describing it like a loan; there is no correlation with compound interest. It is all market driven. You gain in equity, everyone profits, you lose, they share in the loss too. Here is the page from their site explaining the contract language about the “purchase” option. https://guide.unison.com/legalese/
            What I liked about Unison compared to other similar programs is the 30 year contract compared to others with only 10 years max. (Point, Patch, Hometap)

  11. Hi Noah,

    I recently got one of those Unison flyers the other day and although I don’t need a loan right now, I thought I might take the money and invest it, but I’m struggling with your effective interest rate calculation of 14%. When I run some numbers on theoretical situation I come up with about a 6.8% rate which is still high, but much more reasonable and competitive with other options. If you borrowed $100,000 against a $700,000 home (current value), and sell it 25 yrs later in 2043 for $1,750,000 (3.73% appreciation rate) you’d owe them 40% of the $1,050,000 appreciation, or $420,000 plus the original $100,000 for a total of $520,000. $100,000 invested at 6.8% would be worth $520,000 in 25 yrs. What am I missing here?


    1. Hi Mike,

      The first mistake I notice in your calculation is the % share that Unison owns. If you are pulling $100k out of a home worth $700k (14.2% of the home’s value), then you will owe ~57% of the appreciation at the end of the deal (4 x 14.2%). The 40% ownership value I used above is only applicable if you take 10% of your home’s value out.

      Beyond that, you did stumble into something that I didn’t dive into within the post, but the effective interest rate does shrink a bit if you hold the loan for a long time. While the 14.9% I calculated is correct for the first year, it shrinks slightly for each additional year that you hold the loan.

      Using your same numbers, but with the correct Unison appreciation value, the final amount owed back to Unison equals ~$700k ($600k appreciation + $100k loan amount). After 25 years, we have to look at both possibilities to get the correct effective rate.
      If you didn’t take the Unison loan at all, you get to bank the full $1.05 million in appreciation.
      If you did take the Unison loan, then you get to bank your share of the appreciation ($450k) plus the difference of your investment ($100k compounded over 25 years) and the initial loan amount ($100k).

      Equation (x=growth rate):
      $1,050,000 = $450,000 + ($100,000 * (1+x)^25) – $100,000
      x in this case equals 8%
      (Wolfram Alpha solution link)

      For the plan of pulling out money from your home using Unison and investing it, you would need to get a ~8% return on that investment just to break even with doing nothing.

      Keep in mind this still doesn’t take into account the upfront fee that Unison charges (3.9%), so you would need your investments to grow closer to 8.5% in that case to break even. Not quite the 14.9% I calculated above over the long term, but still much higher than most home equity alternatives if you live in an average housing market AND know you won’t move for a at least couple decades.

      1. Hi Noah,
        First, thanks for all this analysis.
        Second, I’m a bit of a geek and want to play with my own scenarios, so i’m trying to recreate your calculations in a google sheet. Best i can tell is i’m trying to calculate your Compound Annual Growth Rate (CAGR) and since i could not find a root function in google, i used the power function: =power((1050000-450000-100000)/100000,(1/25))-1
        but this yields a return rate (to break even) of 6.65%, not the 8% you indicate above. Where is/are my error(s)?

        1. Hey Brad, looks like you just mixed up a plus and minus when determining the end value of the CAGR function.

          should be

          Changing that yields the ~8% value I quoted above.

  12. I agree, I’m at the age and I have the equity where I’ll still leave more to my kids/family than my parents left me. I’ll be able to improve the home and have money left over for other things right up until I take retirement. I am going to start discussions.

  13. Hi Noah,

    I just received an offer in the mail today from UNISON. I had never heard of UNISON before, so I decided to do some research on the internet. I then came across your article.

    This type of offer could work for me. I will explain why. I am 72 years of age. 30 years from now, I will be 102 years of age. I have nobody to leave the house to upon my death. So, I guess that upon my death the house would belong to UNISON. That is okay with me because I have no one to leave the house to. I will have had the use of the money that they are offering me, and will not have had to pay back anything.

    I would like your thoughts on what I have just shared.


    1. Hey Alan,

      If you don’t have any dependents, don’t want to leave any money to charity when you go, and are absolutely certain you won’t move between now and then, then it’s hard to see any downside in tapping into your home’s equity right now when you can use the money.

      I’m not an estate lawyer or anything, but after Unison takes their cut, any remaining value in the house will go into your estate that can be passed to anyone or anything you choose. If you don’t choose anything, then I think it goes to the state (may depend on your location).

      Also, your situation is exactly what reverse mortgages were designed for, so it’s worth looking into that as well. They have their own respective issues and downsides, just like Unison, but could make sense in your situation.

      Best of luck,

      1. Thanks for your reply Noah. I have decided not to follow through with Unison. Zillow.com and Trulia.com list the value of my house at about 200,000 dollars. Also my mortgage company has the value of my house at about 200,000 dollars. However, when I contacted Unison they quoted the value of my house at about 175,000 dollars.

        I feel that Unison quoted me a 25,000 dollar lower value for my house, so that when it comes time to pay them back they will make thousands of dollars extra from what they really should be receiving. If that is the case, then Unison has figured out a clever way to make a lot of extra money. It certainly pays to be very careful in making decisions concerning one’s house.

        1. now if that is what they are doing, then you are right Alan Finch. That does make sense when you think about it.

          1. is anyone going to report unison unethical practice of lowballing the consumers to the attorney general and other regulatory agencies. I live in California. I am seriously considering this course of action.

          2. Zillow had my house estimated at 980,000 when I went to the Unison site and typed my address in to see if my house qualifies. They estimated my property at 757,000 instantly, and the next day my Zillow estimate went down to the same 757000. This is foul play big time. Homes in my area sell for 1 million +. I haven’t gone any further with this or talked to anyone from Unison, but I see where this is going. The partnership with Zillow seems like something mich bigger than just Unison, and we will be reading about indictments at some point.

      2. Noah, I’ve been combing this thread & have seen no mention of how a Unison loan affects the borrower’s credit score. Do we know the answer to that question?

  14. Noah, the value of my home hasn’t gone up in the 15 years I’ve lived here, even after putting in 20 grand in upgrades. Ive fallen on hard times and need cash. Would this be the right program for me?

  15. Noah, you did a great job explaining Unison’s game, but like other posters, I have to take issue with your description that their main win is the 15% interest they are getting on their loan. That is a hefty take for them to be sure, but where they are really screwing you is on their ridiculous lowball estimate of your home’s value. Most people do not understand math well enough to understand what a huge difference that makes. Your example assumed an honest initial appraisal of your home, and just a nationwide average appreciation rate. Neither applies to their typical case. They are lowballing the initial appraisal, and they are only investing in the hottest real estate markets (where appreciate rates are double and triple what you use in your example). So their real rate of return is more like 40-50%. Unison amounts to legal loansharking, Their business plan is genius, as it really preys upon the nation’s fundamental lack of understanding of mathematics.

  16. My situation:

    House worth $450K in metro Detroit, Michigan.
    Will sell it in about 5 years.
    I am bearish on the outlook for real estate locally, work at Ford and
    the big three have a bad outlook, neighborhood in slow decline,
    looks like the top of a national real estate bubble too.
    Willing to speculate that Unison will eat some losses at the time of sale, and
    can afford to be wrong.
    Worried about a low ball appraisal by Unisom, and BS charges for not
    maintaining property…..

  17. Noah:
    Thank you so much for sharing your Financial Expertise which for so many is Priceless especially in Protecting them from making disastrous Financial Decisions.
    I could use your advice. I am facing almost $ 100,000. in Emergency Medical expenses not covered by any type of Insurance and was recently approached by Unison.
    My NYC Park Ave. Condo was appraised between 2.2 M and 2.4 M
    I have an Existing $ 350 K – 30 yr. Mortgage with Quicken Loans at 3.6 % and they have
    offered to revise that Mortgage with a cash out of 100 k but the interest will be changed to 4.9 % and the loan total will rise by 100 K obviously to 450 K. Should I accept or is this a
    mistake for me and what other better options/alternative choices do I have ??
    I considered the Unison Offer but am now leery based on your Number Crunching.
    Your expert thoughts please and many, many thanks in advance Noah. Much appreciated
    Please feel free to ALSO contact me at my Email address besides publishing here.

    1. Noah:
      DAVID PAKTER again-
      I forgot to mention that my Monthly Payment to Quicken Loans will change from $ 1600. per month to $ 2400. per month due to owing 450 K as opposed to the previous 350 K due to the 100 K Cash out on the Revised 30 Year Mortgage.

  18. Grant…can’t get a HELCO without proof of employment income…we are 62 and underemployed…unexpectedly…my husband’s position was to go another 5 years but his employer brought in a younger guy and you know the rest of the story…it was brutal

    1. Angela, I’m sorry to hear of your circumstances. It must be very frustrating and a bit scary. This may seem a bit out of left field, but have you considered Airbnb or another platform for homesharing? I’ve been a host for five years in DC and the money is really good. I rent out a basement apartment in my rowhouse for 10 months of the year and have consistently grossed 20k. I know of many hosts, especially in areas like NYC, who make substantially more and do it as a full time business.

  19. I’m in a bad spot. Live in dc and just took $ out of tsp for boiler replacement. Paying tons for family med bills. Have a pre k’er on my own $2000/month on that alone (high child care market especially for sick kid). Maxed out all credit cards. Credit score plunged from 775 to 530. Living paycheck to paycheck. Owe $350k on a house worth $650k ; currently . Was about to start NDR but got this offer letter for $125k. Can’t get any other type of loan with high revolving debt utilization. Figure i can get this, pay back my Tsp hardship withdrawal and pay off credit cards. Also want to renovate house which i know is an issue. Prime market so expect value to go up a bit more before it levels off. Not selling ever because of location , but may move and rent it out in a few years. Could I buy another house in 5 years or so? Thoughts?

    1. This is exactly my situation, I live on Penn Ave NW in DC, in a Condo here. Same street as the White House!
      I am not on any mortgage though, I own the property outright. I need immediate cash in the amount of 70k for unforeseen expenses and medical bills, I am 24 yrs old and only on my second job so my debt-to-income ratio is floating between 40-50%.. DC is expensive. I got lucky with purchasing the property outright (some help from the parents), but I refuse to ask them to loan me this money, this is my problem to take care of. The property deed is solely under my name, I own the entire $650,000 in equity and I’d like to take around 90k to be on the safe side in the future, maybe even put 10k in a CD and slowly earn interest from that and have the other 10k as a safety in my savings. Our properties in DC keep rising in price though, and it hurts me know that Unison will be earning a lot of money from the future appreciation. I don’t plan on ever selling this property, but I do plan on buying out Unison at some point, which will prove costly and I may need to take out a personal loan at that time, if I didn’t earn enough from my investments by then. I have no other choice though, being young and not established with a high debt-to-income ratio. I already tried HELOC with Wells Fargo, my banking institution. Unison is my only bet and if I pull around 90k, I will owe Unison 90k, plus around 48% appreciation in the future. Patch, Point, and Home Tap don’t seem to have any presence in DC as of yet, so I just entered talks with Unison. What are everyone’s thoughts on my situation? Thanks for any help and advice!

      1. My thoughts, Adam? I think if you go with Unison, your 40 year-old self is going to want to go back in time and slap some sense into your 24 year-old self.

        You are essentially talking about a VERY high interest loan that, many years from now, you’ll realize was a mistake. Let’s say you borrow that 90K, and when you’re 40 your condo is worth $1.5M (very possible in DC). That’s $850,000 of appreciation. If you decide to settle up with Unison at that point, you’ll owe them about $450,000 PLUS the original principle of $90,000. Your $1.5M property is then worth about $950,000 to you. So in those 16 years you’ll have gained $300,000 in equity as opposed to $850,000. Now, I don’t know you. But if that was me…I’d want to go back in time to my 24 year-old self and ask, “What we’re you thinking?!?” Did you REALLY need that $90,000 so bad, that you were willing to pay almost $550,000 for it? Was there REALLY no other option? What would have happened if you had simply toned down your expenses, perhaps driven part-time for Uber or something for a few years or done some other side-huddle to pay off your debt, and just repaid that debt over 7-10 years instead? I’ll tell you what will have happened…you wouldn’t currently be pissed at your 24 year-old self for being so financially reckless at that age. Because now that you’re 40 you realize how young and inexperienced you were at 24, and now you really regret taking that extremely high interest short cut instead of just dealing with that relatively small amount of debt way back then.”

        Like I said Adam, I don’t know you. So I don’t mean to sound like I completely understand YOUR current financial situation. But being 43 now, and having made some dumb financial decisions in my early 20’s, I now wish I had a “re-do” with several of those decisions. At that time I was too young to fully appreciate how young I really was. You’ll likely be significantly more financially stable in your 40’s, and if you’re like me you’ll regret having made what you KNEW were bad deals for you when you were in your 20’s.

        It will be difficult for you to fully appreciate this right now. Because a cruel irony of life is that when we’re young, we fail to fully appreciate exactly how young we are. We can ONLY fully appreciate it when we’re older, and have the accompanying perspective and experience. It’s just “one of those things” you can’t understand now…but will definitely understand when you’re older.

        Unison loans are best suited for people who are in a REALLY bad place. As in, “I’m going to lose the roof over my head if I don’t take this loan” bad. For almost everyone else, it’s just a garden-variety bad, BAD financial deal that is packaged to look less innocuous than it really is.

        Adam, are you going to be homeless and penniless if you DON’T take the Unison money? If not…then carefully walk away from the cliff edge.

        1. Doug73,
          Thank You for taking the time to share your knowledge and wonderful advice with Adam, and hopefully prevent him from making a Very Bad decision out of desperation, & thinking he doesn’t have another choice, which is also Wrong! There is always another choice!

          At 24 yrs of age I don’t think Adam really realizes how truly Blessed he is owning, Free and Clear, a $650k prime piece of Real Estate!

          I hope Adam stepped back, took a deep breath and really listened to you & took your advice.

          Again, Thank You and I hope you Have a Blessed Day.

  20. Some comments have touched on the situation for which the Unison approach is ideal – which happens to be my situation. I am 72, have no dependents, and have 44% equity in my house which is in the Monterey Peninsula area in California. I would like to use some of the equity in my house for a variety of purposes while I am still alive! My monthly income is reasonably comfortable, but I don’t want to take on any additional monthly expenses such as would arise from refinancing, or taking out a HELOC. I did look into a reverse mortgage, but the upfront expenses are huge and the gain in monthly income that would occur was not significant enough for what I would like to do with my money. I contacted Unison and was very impressed with how the program was explained in clear language both in person and in their various documents. As I progressed through the application process, I even had to fill in a Program Knowledge Review that essentially was a quiz about how well I understood everything. After every question I had two options – I understood, or chat with a representative. I was quickly contacted by an Appraiser and a Home Inspector. Both were very thorough and the appraisal came in significantly higher than what I was expecting from Zillow, etc. The maximum amount that they provide is 17.5% of the appraised value if you’ve been in your home for over a year (20% if a year or less). They only share in the gain (or loss) in house value from the appraised value. For me, this means that all the equity I have built up to this point is mine, so if/when I sell the house I would still have a good chunk of money (plus my share of the Unison option contract gain) to buy into an assisted living situation, for example. Even if I sold at a loss, with Unison sharing part of the loss, I still will have a good sized cushion. The paperwork is not complicated and is far less than for a refinance. I only dealt with two people, my Program Specialist and Transaction Specialist. I contacted them on October 16 and expect to receive my funds about November 7. A very efficient process!

    1. Excellent points, and just the kind of discussion I was hoping to locate.

      Like other oldsters here, I’m finding that Unison will likely work very well for me. I’m 71 and have no partner or kids. I live on a fixed income and don’t want to be nickel-and-diming myself every day for the rest of my life. This arrangement will allow me to stay in my home, in which I have about 65% equity, pay off credit cards, and put the balance towards a major home repair which may or may not become necessary as time goes by. A home equity loan is not available, and I’ve never liked the idea of a reverse mortgage, which I think of as an absolute last resort. It may be no worse than a Unison deal, but I’m not comfortable with it, and this way it may still be an option if I live past my shelf life.

      I was very pleased with the appraisal. I live in a lake community where the homes are all quite different and there is added value in the homes because of their lake location. They’re hard to comp correctly because homes from outside the community aren’t equivalent, and I was worried that they might send an appraiser unfamiliar with the issues, but the fellow they sent had grown up in the area and had lived here at one point. Although Zillow estimated my house a bit higher, in other years they’ve been much too low, and one year they mistakenly declared I was in foreclosure (it was a similar address in the same town. They did the same thing to someone else I know who has an address with the same street and number as a one in a neighboring town). After those fiascoes I found it hard to take Zillow very seriously. Better to have a local real estate agent come out and give you a free comp analysis instead. Anyway, I feel this appraisal is pretty accurate.

      The only issue I still have is to have an attorney double-check the contract to be absolutely sure it says what I think it does. Not the finances – I have that part down. But this “open contract” language is something I want my own attorney to read and say is safe to sign.

    2. Hi Hazel. Did you close? How is it going so far? Any changes like others described
      , change in title, Mortgage, credit report? Are you pleased with the overall experience?
      I received a mailing and am considering.

  21. Thank you for this wonderful article. My wife and I almost fell for this option and then I Google’d for “Unison reviews”. This was much helpful! Thanks again!

  22. Noah….so glad I found your article while researching Unison Loans.
    I’m still on the fence for the following reasons and would appreciate your thoughts: My issue is cash flow to make monthly expenses… I am 71 years old and have been retired since age 55. My home is valued (by Zillow at least) to be around $490,000……I owe $310,000 after living in it for 11 years. The home is larger than I need and the mortgage is higher than I’d like, but, I love the home and the area and searches in other areas of Colorado Springs for smaller and less expensive homes have not met my expectation. I took a big hit in ’08 and my Social Security and monthly investment earnings fall just short of my actual monthly cash needs since then. I make up the difference by contracting to certain aerospace companies from time to time and this has kept me in the black since ’08. BUT, the contract work is drying up and I’ve had to start hitting my IRA more than I like. I might be able to ride it out until my demise, but that’s a bet I don’t want to make.
    What’s wrong with taking the $95,000 Unison has offered and not caring about the overall interest as I doubt I’ll outlive the 19 years left on my mortgage. My son’s will take ownership of the home and when Unison takes back the loan and their high appreciation percentage at the point of sale, my son’s will get the left over and that’s that! They stand to get other moneys from my annuities and other accounts and they have never asked what those amounts might be and don’t care as far as I can tell. Call this a bridge loan until death. What say you?

  23. Noah,
    It’s refreshing to see an active blog site with current remarks….thanks for hosting!
    Like many others, I received an offering from Unison, and for the moment I am at least curious. Yes, it seems to good to be true. I wanted to dig up as much information as I could before contacting Unison and entered into any agreement.

    What I am discovering is that they get you with their private appraisal, where they undervalue your home. If that be the case then it’s a matter of whether or not you’re willing to take the hit.

    My situation is similar to others in that I need the cash out to make some repairs to the home, relieve myself of unexpected debt and improve the quality of my daily life. I am 66 yrs old and own my home but I am not creditworthy due to a series of unfortunate events….divorce, illness, etc. I have considered downsizing but I would like to stay in the area which is not possible because the purchase price of a smaller home would ultimately be valued at more than the property tax on my present home. Real estate sales and values are hot so there will be additional profits, however, if I continue to live under my present circumstances I am house rich and cash poor.

    I plan to stay here for at least another 3 years or more and my children will ultimately split my estate when I am gone…it doesn’t seem too bad to me if the appraisal is at least reasonable. Thanks, John

  24. Ok, I read through the unison website. I have over $100,000 of equity in my home. In a market and zip code that continues to gain. Never heard of Unison before receiving a pre-approved letter in the mail. Reviewed their website and Q&A section. I have about $30k of credit card debt. Figured at least $30k-$50k would be great to pay off this debt and still leave me with some extra for home improvements. I completed the application and was declined for not having a credit score at their minimum requirement. My scores are mid 600 since I do carry the high credit card debt. The decline letter or their website NEVER mentioned anything about credit approval OR needing a minimum score. The letter didn’t even tell me what the minimum requirement is…. By the way, no late payments. Just low score due to the high balances. If those were to be paid off my score would jump 100 points. No payments or interest on the (loan) from Unison YET they still need you to have a minimum credit score. So much for it being equity based. Not sure what my credit score has to do with someone sharing in the gained equity of my home. Pretty disappointing to me.

  25. I think the appraisal takes an important and key role in the whole process, also the situation of your home in the market.

    1. Appraisal for current value – If the appraisal price (current value) is higher, then it’s better for the homeowner. As the owner gets more cash with the same percentage and the increase will be less at selling(then unison takes less)

    2. They don’t tell how to handle the case if the actual selling price is lower than the appraisal price at selling. Does it have a hidden rule that the owner can’t sell the house with a price lower than appraisal?

    3. Some reasons that you definitely should be away from it:
    – 1. fee is 3.9% + additional terms — Even 3.9% is a high rate and mostly you will pay more than 3.9%
    – 2. you invest an amount less than 20% but wanna get 80% of the profit, kidding me?
    – 3. how can the owner know the appraisal is fair?

  26. Would Unison be okay in my situation? I am 56 and want to retire at 57. My home in southern California will be paid off and is worth about $500,000. I would like to purchase a small condo (around $180,000) in Nashville and live there half of the time to be close to the other half of my family. I don’t want another mortgage for 30 years. I could take out about $87,000 cash from Unison and have a very small condo payment. I figure it’s kind of like trading my house for two smaller houses. I don’t plan on selling my house in California until I die. I don’t care if my kids inherit less on the house. (Plus, I would have a second home in Tennessee for them to inherit.) . It sounds like a great way to own two homes instead of one. Is it really considered debt if I am selling them equity?

    1. Does anyone know if they require a private appraisal of you are doing this as part of a new home purchase? Most of the replies I see are from people contemplating participating with respect to homes they already own. If you are bringing in unison in connection with a home purchase transaction, will they rely on the purchase price or do they still require a private appraisal?

  27. This is a scenario not covered by the article. I see value in this type of loan as I approach retirement. I’m borrowing against that future equity that I cant take with me when I die… probably before the 30 years are up.

  28. Hi Noah, here’s my scenario. I bought my home 3 years ago for $137k @ 4.250 30 year conventional. Since then, I have refied down to a 20 year at 3.625. At the time, the appraisal came in at around $175k. I have been paying additional principal since the conception of the original mortgage and have continued to do so to date. I am currently about 9 months ahead of the am schedule. Current market analysis shows my home to be valued at around $200k. I currently owe around $111k. Now here’s where I need advice. I need $20k to buy 4 years of service credit to retire early. I’m 53 and planning on going in 2020 @ 55. I do plan on selling and relocating within 3-5 years after I retire. Is there any way, shape or form I would benefit from this program in your opinion. Thanks.

  29. I am considering using the loan to make a lump sum principle only payment on my mortgage. My thoughts are it will save me large amounts of interest on my current mortgage. Please let me know if my line of thinking is off.
    My home is currently valeued at $249000. I purchased 3yrs ago at $183000 and I owe $149000 as of today. I have payed a few large principle payments this year. I have a 30yr fixed rate mortgage at 4.38% if I took 10% and gave the whole amount to pay off principle only would I be saving more then I would be giving up in equity?

    1. Hi Carl, you would essentially be taking a known 4.38% interest rate and trading it in for an unknown interest rate that could be anywhere from negative to 60%+. Just because you won’t be making monthly payments any more doesn’t mean all that effective interest won’t come due at the end of Unison’s term.

      As I calculated in the article, a Unison loan in an average market (home value growing just above inflation, or ~3% per year) is the same as having a loan with a 15% interest rate! That’s over 3x the interest rate you are paying now.

      Unless you are confident your home will grow at a rate lower than 1% per year AND Unison’s team of accountants and actuaries believe the exact opposite (your home growing in value is what they are betting on after all), I would highly recommend against taking out a Unison loan to pay off your fixed rate mortgage.

      As always, I encourage anyone to consult with a financial advisor outside of Unison to make sure you fully understand what you’re signing up for before signing the paperwork.

  30. Noah, as you seem to have quite a bit more knowledge about financing real estate than I do, please help me out. I came across Unison today, and their homeowner program looked good to me. I am buying a house that requires some renovations to be done. I am considering using Unison to do the renovations before I move in. We will not have owned the house long enough to get a HELOC, and even if we did, it would take 3-4 months to close on the HELOC. We would prefer to get the projects done before moving in, meaning we would still rent our current house after closing on the “new” one. I am in the beginning of a so far great career, and plan on buying out Unison on the three year anniversary, so as to have the least amount of appreciation possible. Also, after speaking to Unison, I found out they will not include the improvements in the appraisal, but rather appraise the house as if it were still in the condition at time of sale. Please let me know what you think!

  31. I believe there is another possible reason to go with this. I am retired, disabled and living primarily on SSI. My house has been appraised at $700k and was bought in 2000 for $240k with $170k currently remaining on the loan.

    Now comes the part I don’t think you thought about. I have no relatives and nobody to leave the house to. Essentially it would mean me using some of the house value (rather than leaving it to the state or some charity) without having to make payments on it.

    I’ve also a question that you did not address. If I take out this Unison loan will I be taxed on it as income? If not then it becomes akin to selling a portion of the house equity without having to pay capital gains tax.

  32. Great point, capital gains tax will take a huge bite out of the appreciation of your house. How does taxes change your calculations Noah?

  33. Since my appraisal from Unison came out the same as the one i had 2 weeks earlier from a buyer that backed out, the market here in the north Bay Area is at a high point and in slight decline, and I plan on selling in 3 to 5 years, this seems like I would lose a lot less than most peoples situation here if i go with Unison. Not having to pay the “interest” until i have $ from the sale is win/win too because i don’t want my monthly to go up.
    My main concerns are the limitations Unsion puts on the use of my property
    1. Inability to rent out the whole place. Has to be owners primary residence throughout the entire term. (there is a clause for exceptions but i asked about this and it doesn’t seem like they really make them).
    2. Limits your buyers. No owner-fi or lease to own deals work. No for sale by owner. No sale to someone in you family or that you know. There are some financial benefits to owner fi that i might be interested in when i go to sell.
    Has anyone here had a real estate attorney look over the closing docs from them?
    Anyone moved forward with Unsion?
    I don’t have the 900$ to spend on a lawyer to look at the docs right now but even with these limitations i’m still interested. I just want to make sure there won’t be any unpleasant surprises hidden in what i sign here.

  34. I received the Unison mailer last week and immediately thought that there was catch. Only when I ran the numbers in a spreadsheet did I realize how much it was like those payday loans.

    As an example, assume a starting house value of 1 million and appreciation rate of 3.73%. At that rate, in 15 years the value will increase by roughly $732,000:

    Home Value
    Present 1,000,000
    Appreciation 3.73%
    Years 15
    Future 1,732,071
    Gain 732,071

    If you take out a home equity loan of $100,000 (10% of the home’s value) at 5% interest rate and pay it off in 15 years, you will pay a total of about $42,000 in interest (total of payments = $142,000):

    Home Equity
    Loan 100,000
    Int. Rate 5.00%
    Monthly Payment 791
    Total Payment 142,343
    Total Interest Paid 42,343

    But if you take the 10% “Investment” from Unison, after 15 years you will have to pay them 40% of the gain in the home value, which will come out to over $292,000 ( (total payback = $392,000):

    Investment 100,000
    Int. Rate –
    Monthly Payment –
    Total Payment 392,828
    Total “Interest” Paid 292,828

    That’s a difference of more than $250,000!

    If you want to play using different parameters, I have included a link to the spreadsheet here:


    1. P.S. to my previous comment:

      To keep it simple, I didn’t include loan/investment processing fees, tax implications, etc. These can certainly have an effect on the final numbers.

      The example also assume that Unison’s appraisal matches the actual market value of the home. If their appraisal is on the lower side, it will pad their returns. And I am sure Unison only picks areas where they see above average appreciation.

    2. Thank you so much for that blog. I thought the offer from Unison was too good to be true and your calculations were very useful !

  35. I have a question. Recently my family had to buy a bigger house to accommodate an older family member who had to move in with us for health reasons. As part of the arrangement, she contributed most of her savings to the down payment to help us make the purchase. (We live in a part of the country where housing costs are high) Recently, I’ve been thinking about what we will do if she has future costs that require some liquidity in the equity of our home. I feel that part of the equity belongs to her anyway since she helped us to buy the home. Would Unison be a viable option to have those funds liquid should new health costs and/or living arrangements arise in the near future?

  36. I think there are 2 big factors that make Unison appealing to some people.
    1. Compared to a Home Equity Loan, you don’t have any monthly payments. This is particularly important for people who are living paycheck to paycheck. So for us, another payment of roughly $400 month is a non-starter.
    2. If your house value has already gone way up since you bought it, you know you will still make lots of money on a sale.

    Here’s my scenario. I bought my house for $520,00 in 2002. Unison just appraised it at $985,00. (By the way, only about 60K less than Zillow so I think it’s fair.) I owe about $280,000 on the mortgage. So as a starting point. I will clear roughly $700,000 (minus realtor fees) if I sell my house now. Nice, but I don’t want to move now as my kids are in HS and happy. So all that equity on paper isn’t really helping me now. And I recently took a lower paying job, thus the paycheck to paycheck. I could use the Unison money to pay off some credit card debt and some personal loans.
    I’m planning to take out 6% with Unison (about $59K) which gives Unison a 24% share of the increase in the value of the house from now going forward. If the value of the house keeps going up I’m still making money, just a little less because of Unison’s share. And my hunch is that real estate prices aren’t going to continue to increase at the same rate that they have over the last 15 years. Thoughts?

  37. I had never heard of Unison until half an hour ago when I opened the he mail. It took only the second look at the options to my search terms to get ‘reviews’ and there you are. I’ve scanned through and need to go back and read to digest it slowly, but this is great! I mean what Unson offers isn’t great, but this detailed article is! Clearly written, sensible in progression of ideas, and nails the coffin in dollars and sense! Thanks very much.

  38. Hi Noah,
    Thanks for the blog appreciate it. Would you mind explaining how it works in cases where the home is already appraised much and not much scope of appreciation other than 1% or 2% in the next 3-4 years and one has plans to sell after 3 years .

    scenario :
    1) Brought a home at 200K , got 10%(assuming) from union which is 20K, sold the home at 120K (loss of 80K) . In such cases how the math plays out ? one still needs to pay the loan amount 20K ? how about the loss sharing part
    2) if one sells the home below appraisal value due to some constraints , does Unison takes the loss or they will stick to the appraisal value not the sold value?

    Appreciate if you have any thoughts to share


  39. I saw some situations similar to mine without responses. My situation is I have a house valued at $800k I owe $300k. I’m in a tuff spot, to young to retire (44) and financially strapped. I was injured on the job and now permanently disabled. My child is just starting high school so we can’t pull her out at this stage and move, but we plan on moving when she graduates in 4 years. Does it make sense to take the unison loan? My wife works part time and I get nothing while I process threw the system and we can’t afford the medical bills and now the CC that are close to being maxed out. Any suggestions?

  40. Are you actually giving away money or are you sharing in equity while bringing in a partner. You must also factor in the the additional cost of PMI that you won’t be paying on a monthly basis and the lower mortgage payment your not paying because of a greater down payment. You may also be able to buy down your interest rate because of your larger down payment. If you’re looking to buy a second home and aren’t concerned with leaving anything to a heir then this could be a good fit for a buyer looking to buy a second home like myself. It isn’t always too good to be true because it sounds like it is too good to be true. This program looks like a reit. They are betting on two things. Appreciate spread and the fact they are spreading their risk over a large group of properties. Good financial sense on their part especially since the average home owner lives in their house on average for seven years. Look this may not be for every buyer but don’t look a gift horse in the mouth because you think it’s too good to be true.

  41. I have a home in bay area and had home appraised by the bank issueing me a line of credit loan. the appraisal was for $150,000 and the market value is $500,000. So if unison was to do the same does that mean they would get 40% of $350,000 if thats what I sold it for $500,000? appraisal usually are lower then the market value. At least in the bay area.
    Also,I have two mobile homes on owned land and both appraisals are much lower then the market value of the homes. Can anyone helpme on this? Am I missing something or reading the offer wrong?

  42. My home is on 15 year mortgage, out of which 2 years have already passed, with best record. After 13 years, my property will be free from any burden of mortgage. My property value today is 6,75,000/- and loan balance is $ 3,00,000/- . I have no intention to sell my property for coming 30 years. What kind of arithmetic will happen, in my case of deal with Unison.

  43. The commentary provided has a major flawed assumption:
    * Housing will compound at a positive rate annually

    I do not see this scenario playing out and there will be a correction in housing prices. I was fortunate to get an appraisal through Unison that is higher than what Zillow/tax assessments provided. I am treating this as a call option against future appreciation, hence this is a better deal than the original poster states. It is astonishing that everyone here assumes positive growth (except for the guy in Detroit), circa 2007 all over again.

  44. Proposal of Unison is good for a person who uses funds in his business, where returns are far better.

  45. I am about to go forward with Unison…My situation is this
    1. I bought my home in 1970 for $31,500
    2, It just appraised for $960,000 ( good ‘ol southern Calif)
    3. I will receive $100,000 less fee.
    4. I own my home free and clear
    5. No debt other than a car payment which I would pay off about 14K
    5. I hope to live here for a minimum of 5 years
    I will be 81 in May..in good health. I have an adequate income, but I keep a lid on spending. I would like have the freedom of not stressing when I want to do something for my family or myself. I feel like the extra available money would do just that. At the end of the Unison agreement, My family would still have a hefty inheritance from the family home. Basically I just want $$ now and pay when I am scattered to the winds and leave something to my children…I appreciate all comments..Am I wrong or what???

  46. Just skimmed the many comments above. The first and foremost question that comes to my mind is whether the Unison front end six figure cash payout is a taxable event, which is a major consideration. Anyone?

  47. I’m considering agreeing to a transaction with Unison. For me, it makes sense if the current appraised value comes in at a fair price for the house. Can anyone please answer the following questions about the initial appraisal for me?
    a. Who orders the private appraisal?
    b. Is the appraisal ordered from an independent third party or is it done in-house by someone at Unison?
    c. Who pays for the upfront appraisal?
    d. Will I be given an opportunity to decline to participate in the Unison program after I see the results of the appraisal if I think that the appraisal is unfairly priced?
    e. Will I be asked to pay for the appraisal if I decline to proceed with the Unison transaction after I see the appraised value?

    Thanks so much to anyone that has personal experience with these questions already.


  48. Hello,
    I originally started out with Unison but similarly the math was off to me so I tried another company, Hometap. However, at closing, it requires an irrevocable power of attorney to them for “the event of default so they can transfer the deed, sell and collect funds due”, which caused me to back out. I’m wondering if this is the same for both companies? If it is, I like Hometap numbers better, but if not, I’m reconsidering Unison only to remain in control.
    Has anyone faced this concern and have thoughts?

  49. My situation is possibly a little different, although I did not read all of the comments.
    I’m 73 years old and have some equity in my home. The bank will not refinance my mortgage because I’m retired and income is low. – Pretty rotten of them since I’ve been with them for years and have an 810 credit rating–
    I really have no one to leave my equity to upon my death, and I would like to make improvements to the home to make it more comfortable for me – new roof and heating/cooling system – so I would use the proceeds of the loan to improve the property. The idea of not increasing my house payments is appealing. I don’t plan on moving and will probably owning this house.
    Another question (although not probable) – does Unison basically have a lien on my house like a second mortgage? What happens if I default and the house goes to foreclosure?
    Might this be a good solution for me? Thanks for any suggestions and input.

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