For homeowners who have built up equity, you might have considered tapping that equity to renovate your space in order to match your current needs, or pay down other debts that you’re facing. But taking on more debt or adding another payment to your monthly bills might not be the best solution for your situation.
If this speaks to you, another option to consider is co-investing. With a co-investment, a homeowner can receive a lump sum of cash in exchange for a share in their home’s change in value over time. This offers homeowners an alternative to traditional equity-tapping options that can mean taking on more debt, interest or monthly payments.
For example, a home equity loan can come with added fees, and the homeowner must pay back the original sum plus interest. With a co-investment, there are no monthly payments, no interest and no added debt.
Unison, a San Francisco-based real estate company, is a leader in this growing field. Unison offers homeowners a cash payment of up to 17.5 percent of their home’s current market value. Then, when the homeowner sells the house or 30 years pass, the owner pays Unison an amount equal to the initial co-investment, plus (or minus) a percentage of the home’s change in value.
Homeowners can use the cash for anything, but Unison recommends something of long-term value: with homeowners’ changing needs due to the pandemic, some options might be paying for kids’ college tuition or medical expenses, or a home renovation such as a home office, gym, or accessory dwelling unit for any new (or returning) household members. Further, for any remodeling work that improves the home’s value, with a co-investment, the homeowner gets to keep the gains as well as the equity built from prompt mortgage payments.
For those interested in a co-investment, Unison looks for partners who are generally good homeowners: They keep the home as their primary residence; stay current on payments for mortgages, property tax, and homeowners’ insurance; keep the home well-maintained to retain and increase value; and keep Unison informed of issues, such as remodeling plans, emergencies or plans to sell the home.
To find out how Unison can help you get the most out of homeownership, visit unison.com.