Understanding Your Home Equity Agreement (HEA) Obligations

Unlock’s home equity agreement (HEA) is designed to allow homeowners to access their home equity without having to sell their home or replace their current mortgage. With an HEA, you retain ownership and all occupancy rights. The goal is to continue living in your home as normal.  

And living as normal also means maintaining the usual obligations that are required of most homeowners, such as staying current with property taxes and making home repairs. Here’s a look at what we require of our homeowners during the term of their home equity agreements.  

Financial Obligations. As a homeowner, you have a variety of financial obligations. Your mortgage is probably at the top of the list, but even if your home is paid off, you’re still obligated to pay property taxes, HOA fees (if you live in a covenant-controlled community) and payments for any loans that might be secured by your home, such as home equity loan (HEL) or home equity line of credit. We expect you to stay current with those obligations during the term of your HEA.  

If you fail to pay your mortgage, property taxes or another related financial obligation, you may be considered in default on your agreement. We will let you know of any problems (late payments or non-payments) that require attention and typically give you time to fix the problem before declaring default. You may opt against addressing the problem and decide to buy out Unlock at that time. As a reminder, you can settle your agreement with Unlock any time with cash on hand.  
  

Protecting Your Property. In addition to staying current with the financial obligations tied to your home, Unlock requires you to protect your property by maintaining it in good condition and carrying homeowners’ insurance to cover any potential damage that could arise during the term of your agreement. 

Under your HEA, you must maintain hazard insurance equal to the replacement cost of your home.  You must increase your coverage when replacement costs rise.  Your policy must include fire and other hazards in coverage amounts that are typical for similar homes in your area. For example, if you live in a flood zone, you must carry flood insurance.  

If there is damage to your home that materially affects its value during your HEA term, you will be expected to make an insurance claim and restore or repair the property to its previous condition.  If the property was underinsured, you must pay for the restoration or repair, out of your other assets.  

Unlock must be named on all property insurance policies as a “mortgagee” and/or “additional interest” throughout the term of the HEA, even if the insurance carrier changes.  Adding us as a loss payee to your insurance policies is a simple process that is handled by your insurance provider. 

We understand that homes will undergo typical wear and tear, but we do expect homeowners to keep up with regular maintenance and address major repairs as needed. Failing to maintain your home can affect its value.  To address a loss in value caused by disrepair or neglected maintenance, your agreement has a provision called the Maintenance Adjustment. For example, if you decide to sell your home 10 years after entering an Unlock Agreement and the Ending Home Value is $40,000 less than it should be due to extensive termite damage, we will have the right to make a Maintenance Adjustment. The amount of the Maintenance Adjustment is determined by independent third-party appraisals, inspections, and repair estimates.  If you don’t already have one, it may be a good idea to establish an emergency fund to cover any unexpected home repairs. 

Keeping in Touch. It’s not unusual for homeowners to experience certain life changes during the course of their HEA term. You might get married, decide to place your home in a trust or turn your home into a rental. Those events can impact the terms or status of your HEA, so we ask that you keep us posted about any major changes. You can manage many of these changes– through your Customer Dashboard.  We may charge an administration fee to implement a change to your HEA, depending on the work involved. Consult your product guide for a full list of events that require notification. You can also reach out to us directly with questions at support@unlock.com. 

Remember, you maintain control of your property during your HEA. Keeping up with your financial and maintenance obligations ensures that your property remains in good standing and retains its value throughout your agreement, which benefits both you and Unlock.