Unlock is a real estate investor. We pay you, in cash, for the right to share in the proceeds from selling your home in the future. In a typical transaction we might provide cash equal to 10% of the home value today in exchange for 16% of the home value in the future.
The investment Unlock makes is not a loan. There are no monthly payments - not now, not ever. You can use the proceeds any way you want, and you continue to own your home just as you always have.
When you are ready to sell your home, we share in the proceeds according to the terms (e.g. 10% for 16%). You can also buy us out based on an appraised value without selling your home.
Because there are no monthly payments with Unlock, there is no income requirement to use the program.
Homeowners need to have sufficient equity built up in their home, typically at least 20% of the home value. The more home equity you have, the more cash we can provide. Homeowners must have a minimum FICO score of 500. In some instances Unlock may request verification of income to compensate for other factors which may affect the risk of the transaction for our investment, for instance if the property is used as a rental property we may want to verify the rent.
Your Investment Officer will always provide the list of required documentation to apply and be approved for an Unlock Agreement.
Once you create an account, we'll provide Preliminary Terms including an estimate of the maximum cash available.
In general, the maximum amount of cash available from Unlock is $500,000. The specific amount we can offer you depends on four things:
Note that these factors can affect each other. For instance, an expensive home with a lot of debt may qualify for less cash than a less expensive home with no debt.
Unlock invests in most residential real estate (single family, condominiums, 2-4 unit properties and townhomes), including both owner and non-owner occupied. We currently do not invest in TICs, co-ops, raw land, or any prefabricated homes such as mobile homes or manufactured housing.
We currently invest in California, Colorado, Florida, North Carolina, New Jersey and Washington state.
We use independent appraisals to determine value.
Your home's value and condition are determined during the underwriting of your Unlock Agreement. For any termination of the Agreement, your home's value and condition must also be determined, and this may include calculating the amount of an Improvement Adjustment or Maintenance Adjustment. Objectivity and accuracy of the appraisal and inspection process is thus fundamental to the Unlock Agreement, and we are committed to those goals in our standards and procedures, including the following:
Under almost all circumstances, appraisals will be ordered by Unlock through an appraisal management company or third-party appraiser, and inspections will be ordered by Unlock through a local inspection company.
In some cases, alternative valuations may be obtained from independent third parties, such as a Broker Price Opinion or AVM (Automated Valuation Method). Inspections are sometimes specialized, and more than one may be needed (for example a general inspection plus a pest inspection). The homeowner is typically responsible to pay for the first appraisal and the first inspections ordered by Unlock in connection with the origination and any termination of the Agreement or any calculation of the Unlock Share.
If either you or Unlock believes that an appraisal is factually incorrect, we may request a prompt reconsideration of the appraisal, or an additional appraisal. The requesting party will bear the additional cost. The cost will be shared if both parties are requesting. Unlock does not ever apply a discount to the value determined by an appraiser.
Nope. But you still must pay your mortgage, taxes, HOA dues, etc. just as if you had not gotten an Unlock Agreement.
Yes. If you hold the property in an LLC or other corporation, we will need to get a majority member's agreement for the entity that owns the property.
In some cases Unlock may require you to payoff some debts when your Unlock Agreement is originated but Unlock does not place any restrictions on the net cash you receive from Unlock after the close of escrow.
There are no monthly payments with Unlock. Instead, Unlock shares in the value of your home according to the terms of our agreement when you sell or decide to buy us out.
A typical agreement might exchange 10% of the current home's value (cash to you) for 16% of the future home's value (the Unlock Share). The annualized cost of your agreement can never exceed 18% and the annualized cost of the agreement drops significantly the longer you hold your agreement.
At closing Unlock charges an origination fee of 3% of Unlock's investment, which is comparable to many types of real estate financing. You will also pay any required third-party expenses to appraise, inspect, and record your transaction.
An Unlock Agreement has no age requirements and can yield similar cash to a homeowner as a reverse mortgage. Unlike a typical reverse mortgage, you can take out an Unlock Agreement in addition to your first mortgage.
In addition, a reverse mortgage is a loan and has an interest rate which increases the balance owed regardless of the home's value. Over time it is possible for a reverse mortgage to consume all of your home equity. An Unlock agreement is not a loan, is impacted by home value and does not consume all of your home equity.
You do! Unlock secures its interest by placing a lien on the property but has no rights of occupancy and Unlock does not go on title except in rare circumstances. See the Unlock Program Guide you receive after you apply for more details.
Apply online by creating an account, getting your Preliminary Terms and then completing our application. We only ask for a few documents:
Upon review of the application and your intent to proceed, we will order an appraisal and inspection on your home. If everything checks out we will issue an Investment Closing Statement to you with your final terms.
About 30 days, depending on how quick you want to move and how long it takes to get an appraisal and inspection completed.
It takes just 60 seconds to create an account and get Preliminary Terms. If you would like to move forward, we ask you complete an application and upload a handful of documents, which requires another 5-10 minutes of work.
Once the application is complete, we will verify the information, fine tune our numbers, and issue an Investment Estimate which contains specific terms and estimated costs of your transaction. We’ll also schedule a call with you to walk you through your Investment Estimate, the key mechanics of the agreement, and answer any questions you may have. If you tell us you intend to proceed by signing your Investment Estimate, we will order reports to appraise, inspect and confirm title on your home.
Upon review of these reports, we will update our offer and issue you an Investment Closing Statement with final terms and costs. Once you sign the Investment Closing Statement we will schedule a notary to sign your documents and wire our investment funds to you accordingly. From the date you sign the documents with the notary, you have three (3) business days to cancel your Agreement.
All in, the process takes about 30 calendar days, but it can take as little as 10 days depending on how quickly you want to move and how long it takes to get the appraisal and inspection.
We make a soft inquiry during the application process to verify credit, but this inquiry is only visible to you and does not affect your credit score.
When estimating the maximum cash we can offer, we calculate something we call Total Home Finance. Total Home Finance is the home's current loan-to-value percentage plus Unlock's share percentage.
For example, let's say the home is worth $500,000 and currently has $300,000 in mortgage debt. Let's also say that the Exchange Rate for a $50,000 Unlock Investment is 1.6x. This would result in a 16% Unlock Percentage (10% x 1.6 = 16%). The loan-to-value is 60% ($300,000 / $500,000) and the Total Home Finance is 76% (60% + 16%).
Current loan-to-value + Unlock Percentage = Total Home Finance
Typically, yes. Accurate determinations of your home's value and condition are required during the underwriting of your Unlock Agreement and the appraiser and inspector will need to enter your home to do their jobs. Unlock requires homeowners to cooperate with appraisers and inspectors by:
In some cases, alternative valuations may be obtained from independent third parties, such as a Broker Price Opinion or AVM (Automated Valuation Method). Reach out to us if you have concerns about granting access to your property.
No. We are not added to the title at origination of your Unlock investment, but we do file documents with the county recorder which put a lien on the property to protect our investment. In rare circumstances Unlock may be added to title in the event of a foreclosure. See your Unlock Program Guide which you receive after applying for more details.
It is our understanding that the cash you receive from us when you enter the Unlock Agreement should not be taxable at that time, and there should be typical real estate capital gains tax treatment when the Agreement ends. But Unlock is not a tax advisor and does not give tax advice. We do not make any representations or warranties concerning tax matters or the tax treatment of payments made or obligations owed under the Agreement.
Since each homeowner's tax situation is unique, we recommend that you consult with and rely on the advice provided by your tax advisor, not Unlock, for a full explanation of the tax impact of the Unlock Agreement. We are certainly happy to speak with him or her directly.
Please contact us if you have further questions.
Sell whenever you want, we will just need to coordinate.
You have the right to sell your home whenever you want. You will need to notify Unlock as soon as you decide to sell so that we can prepare and avoid any hiccups in the transaction.
To calculate the Unlock Share we need to determine the Ending Home Value. Typically, the Ending Home Value is equal to the sale price to a bona fide, arms-length, third party buyer. It includes the fair market value of any non-cash consideration (such as a seller concession), and does not include deductions for closing costs, taxes, documentary fees, mortgage loans, other liens or secured loans, sales commissions, or appraisal expenses.
After we receive notice of your intent to sell, we may decide to obtain a third-party appraisal. In addition to supplying an independent measure of your home's value, an appraisal will be needed if you have requested an Improvement Adjustment. We will also obtain a property inspection to determine if a Maintenance Adjustment might be required. Special provisions may apply if it appears that your sale is not arms-length, or the proposed sale price is materially different from your home's market value.
Once the Ending Home Value and Sharable Value are determined, we will provide the escrow company with a settlement statement including the exact amount of the Unlock Share and documents needed to release our lien on the property. At the closing of your sale, the escrow company will pay us the Unlock Share out of the sale proceeds and release our lien, ending the Unlock Agreement. How much you will receive from the sale will depend on the amount payable to us, the outstanding balances of any loans secured by your property, and real estate commissions and other costs associated with the sale of your home.
You can sell your home or buy out Unlock at any time, and you can even buy out Unlock in partial payments whenever you want over your term (typically 10 years).
If you have not sold your home or elected to buy out Unlock by the end of your term, then you will need to settle up with us by either selling your home or buying us out.
Annualized Cost is the average annual cost of the money you receive from Unlock, from the start to the end of our Agreement. It is a convenient way to compare the cost of an Unlock Agreement to a loan. Since your home's future value and the length of time your Agreement will remain outstanding are unknown, Annualized Cost can be estimated at the outset, but the actual cost can only be determined when your Agreement ends.
Annualized Cost = (Unlock Share / (Investment Payment - Origination Fee)) ^ (365 / Term Days) - 1
We are happy to provide a sample of the legal agreement to any applicant upon request.
You can buy us out partially or in full any time after the six month anniversary of our agreement. We will need to have a third party appraise the home at the time of buyout.
You have the right to end your Unlock Agreement without selling your home, by buying Unlock out. We call this an Owner Buyout. You can do this at any time during the term after the six month anniversary of its effective date by sending an Owner Buyout Request. It is best to send your notice at least 45 days ahead of the desired closing date. There is no prepayment penalty.
The calculation and payment of the Unlock Share is just like with a home sale, but since there is no sale price available to determine Ending Home Value, it is determined by an independent third-party appraisal. The appraisal will also determine the amount of an Improvement Adjustment if you have requested one. We will obtain a property inspection to determine if a Maintenance Adjustment might be needed.
Once the Ending Home Value and Sharable Value are determined, we will engage an escrow company and supply a settlement statement including the exact amount of the Unlock Share and documents needed to release our lien on the property. You will wire funds to the escrow company to cover the Unlock Share and all transaction costs. At the closing, the escrow company will pay us the Unlock Share and release our lien, ending the Unlock Agreement.
If you qualify for a mortgage loan based on credit score and income, you may be able to pay some or all the cost of an Owner Buyout by refinancing your mortgage or obtaining an additional loan against your property.
Just like a normal buyout with an appraisal.
To provide even more flexibility, the Unlock Agreement allows you to request a Partial Buyout at any time during the term. The process is the same as with an Owner Buyout except you identify your intention as partial and let us know what portion of your Agreement you want to buy out.
All Partial Buyouts are subject to Unlock approval, which will not be unreasonably withheld. There is technically no limit to the number of Partial Buyouts you can do during the term as long as you are willing to pay for the required appraisal each time (and a home inspection, if needed), but Unlock may decline a Partial Buyout if the remaining Unlock Percentage would fall below 25% of the original Unlock Percentage. Here is an example:
You enter an Unlock Agreement
Three years later you request a Partial Buyout for half of the Agreement
We settle at the terms we originally agreed upon. When home value falls your Unlock Agreement costs less. For instance, let's say you enter into an Unlock Agreement for a $50,000 investment in exchange for 16% of the future home value. Let's say your home is worth $500,000 when receive the investment amount. The home value falls by 15% to $425,000 and you decide to buy out Unlock. You pay Unlock $68,000 (16% of $480,000). This is 15% less than you would have paid if your home had maintained its value.
We do not share in the value created by improvements you make.
Making home improvements is a wonderful way to increase the value and enjoyment of your home. And as a partner in homeownership, we designed the Unlock Agreement to be supportive of home improvement efforts.
If you make home improvements at your expense, and thereby increase your home's value, it makes sense that you should keep all the value you create. To address that, the Agreement has a provision called the Improvement Adjustment. Here is an example.
It is important to note that the cost of your home improvement project is not used to determine the amount of the Improvement Adjustment. The amount will equal the portion of your home's value that is attributable to your improvements at the time you sell. Home improvement projects will sometimes increase the value of your home by an amount that is less than what they cost. In some cases, the added value can depreciate over time. For example, adding an additional bedroom and bathroom may increase the value of your home by 80% of the cost of the project. Adding an in-ground pool might only increase value by 20% of its cost. A kitchen remodel may fully depreciate over an extended period, as the appliances, countertops and cabinets wear out and the style becomes dated.
An independent third-party appraisal determines the amount of the Improvement Adjustment. To enable the appraiser to determine what increase in value of your property is attributable to your improvements, you must submit clear, detailed photographic evidence of your property (and other evidence including building permits and descriptions of the project) in its before condition, so the appraiser can visually compare your improvements with the prior condition of your property.
For your project to qualify for an Improvement Adjustment, you must follow local building ordinances, including obtaining any required work permits. Improvement projects that taken together have added less than $10,000 to your home's value may not qualify for an Improvement Adjustment.
Ending Home Value - Improvement Adjustment + Maintenance Adjustment = Sharable Value
We do not share in the value lost if you do not maintain your property.
During the term of the Unlock Agreement it is your responsibility to maintain your home in good condition, subject to normal wear-and-tear. Unlock makes its investment under the assumption that you will honor this obligation. If you do not, when the Agreement ends your home's value will most likely be less than it would have been if it had been properly maintained and that would negatively affect both of us.
To address that, the 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 would have the right to make a Maintenance Adjustment. For purposes of calculating the Unlock Share, the Ending Home Value would be adjusted upward by $40,000 (to arrive at Sharable Value), so Unlock would not share in the loss.
The amount of the Maintenance Adjustment is determined by independent third-party appraisals, inspections, and repair estimates. Typically, no Maintenance Adjustment will apply unless the aggregate cost of the required repairs is at least $10,000.
You can think of the Improvement Adjustment and Maintenance Adjustment as flip sides of the same coin. In each case, something happened during the term; the resulting adjustment preserves the spirit of our Agreement.
In some cases, there can be both an Improvement Adjustment and Maintenance Adjustment applied to the Ending Home Value.
Ending Home Value - Improvement Adjustment + Maintenance Adjustment = Sharable Value
Yes but we limit the amount of debt you can have on the home during our agreement so that you maintain at least 20% equity.
You are free to borrow against your home during the term of our Agreement if you do not exceed the Total Home Finance Limit.
Unlock wants you to have at least 20% or more equity in your home while our Agreement is in effect. This protects both the value of your equity stake in the home and Unlock's investment. The Agreement therefore has a provision called the Total Home Finance Limit, which limits the amount of financing that can be secured by your home to a specific percentage of its value (typically 80%).
The limit applies to all outstanding mortgage loan balances, any available but undrawn credit lines secured by your home (for example, a home equity line of credit) and the uncapped value of the Unlock Percentage. It does not apply to any financing that is not secured by your home, such as credit cards, car loans or personal loans.
If you get a new loan or refinance an existing one, we may charge a reasonable Administration Fee for processing the subordination of our interest in your property to the new debt, and you will be responsible for any related third-party expenses, such as a recording fee.
We will not typically consent to a reverse mortgage, shared appreciation loan, or any loan with a negative amortization feature. If the value of your home has declined during the term of the Unlock Agreement, we may refuse to subordinate to new or modified debt if the total amount of debt on the property will increase as a result.
While Unlock will typically subordinate to new loans subject to the Total Home Finance Limit, we cannot guarantee that a mortgage lender will agree to lend on a property with an Unlock Agreement to the same extent or on the same terms as they would for a property without an Unlock Agreement. It is possible that you will need to terminate your Unlock Agreement to complete a future home loan.
Life events may occur during the term of our Agreement that require changes to title or ownership of your home, or to Unlock's lien. We will help you manage such changes as they relate to our Agreement, including:
Depending on the type and amount of work required to accommodate the changes, there may be a reasonable Administration Fee charged, and you will pay or reimburse Unlock for any third-party expenses related to the work
You need to stay current on your obligations, but we will actively work with you to resolve any issue if you cannot. Foreclosure is a last resort.
During the term of our Agreement you must promptly pay your mortgage, property taxes, property insurance and any other housing obligations, such as homeowners association or condominium fees.
If you default under your Unlock Agreement, we may need to protect our investment. In many cases our action will protect you as well. A default can result from a life event like a job loss or serious illness not within a homeowner's control. Events of default include:
Not all defaults are serious enough to require action, but some are. We will let you know of any problem we are aware of that requires your attention. We will give you time to fix the problem before declaring default, unless in our judgment the problem can have an immediate and material impact. You can choose not to fix the problem, and instead settle your Unlock Agreement.
In the highly unlikely case of a material and uncured default, Unlock may decide to make a Protective Advance, or be forced to take other action to protect its investment, including: 1) initiating a foreclosure proceeding on the property in accordance with applicable law; or 2) electing to convert the Unlock Percentage into fractional ownership and compelling the sale of the property. In either case, you would have ample further opportunity to fix the problem but if you do not cure the default, you could lose the property.
We may charge Administration Fees and invoice you for all third-party expenses associated with a default (such as legal expenses), but only where such expenses are reasonable and customary, and subject to applicable law.
Foreclosure will always be a last resort. As investors in your home, in most cases our interests will be tightly aligned, and we will first try other remedies to help you fix a problem, such as:
Protective Advances If a default materially jeopardizes the value of the Unlock Share, we will have the right (after letting you know) to protect your home's value. We can sometimes do this by making a Protective Advance, which is money that Unlock spends on your behalf. For example, if you do not pay your property tax bill, we might decide to correct the problem by making a Protective Advance to pay it.
The Unlock Agreement gives us the right to make Protective Advances when we consider necessary. You will always be responsible to repay any Protective Advances we make on your behalf, and you will be charged an Administration Fee when we make one. You may also be charged interest on the balance of any Protective Advance until it is repaid. This is the only circumstance in which interest is ever paid under the Agreement.
Non-Distressed Sale If you fall behind on your mortgage and the lender starts a foreclosure process, it is in our best interest to help you get the best sale price possible for your home. To do this, Unlock may offer you something called a Non-Distressed Sale which is designed to prevent your home from going to foreclosure and becoming a distressed property.
For example, we might offer to make a payment to the lender to bring the mortgage loan current, which would stop the foreclosure process, and then you and we, working together, would market your home for sale in the normal way. We might also make the monthly mortgage payments on your behalf until the sale closes. This can help preserve your home's value so it can be sold for the maximum possible price. It can also protect your credit since you would not have a foreclosure on your record. This feature is a good example of how our interests are aligned as co-investors in your home.
Note that any such payments made by Unlock would be considered Protective Advances, and we will charge an Administration Fee to process a Non-Distressed Sale.
At the start of the Unlock Agreement, all owners of the property (as reflected on title) must be signatories to the Agreement. If you die during the term of your Agreement and you are survived by a spouse or other co-owner of your property who is also a signatory to the Agreement, the Agreement will continue unaffected.
If you die and you are not survived by anyone else who is a signatory, your heirs or estate will be needed to settle the Agreement by either selling the home or doing an Owner Buyout. For this reason, it especially important that you discuss your decision to enter the Unlock Agreement with your heirs and executor during your lifetime. They should understand the effect the Agreement can have on your estate, and if you add a spouse, partner, or other new person onto title to your property during the term of your Agreement, you should notify Unlock so that person can become a signatory.
If your heirs are unable to pay the cost of an Owner Buyout, they may need to sell the property to settle the Agreement. Your heirs will have 180 days to settle. Unlock may provide an additional 180 days to complete a sale process if that is the chosen settlement method.