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Who qualifies for Unlock?
Homeowners need to have sufficient equity built up in their home. The more home equity you have, the more cash we can provide. Homeowners must have a minimum FICO score of 500. In some instances, we may request verification of income to compensate for other factors which may affect the risk of our investment; for instance if the property is used as a rental property we may want to verify the rent. The following limitations shall apply to credit scores of 550 or less: no bankruptcy, short sale, or deed in lieu within the previous five years; no more than one 60-day delinquency on any mortgage within the prior 24-months; a minimum investment amount of $30,000; property condition rating must be C4 or better, as described in the Uniform Appraisal Dataset (UAD); acceptance of all liens on the property; investment proceeds to pay off certain outstanding debts as a condition to close; and a minimum debt-service coverage ratio (DSCR) of 1.25x for investment properties.
Who owns the home?
You do! Unlock secures its interest by placing a lien on the property but has no rights of occupancy. We do not go on title except in rare circumstances. See the Unlock Product Guide for more details.
Is this a loan and are there any monthly payments?
How much does Unlock cost?
There are no monthly payments or interest charges with Unlock. Instead, we share in the value of your home according to the terms of the Unlock Agreement when you sell or decide to buy us out. At closing, we charge an origination fee of 3.9% of our investment, which is comparable to many other types of financing. You will also pay any required third-party expenses to appraise and inspect your home and record your transaction. See the Unlock Product Guide for more details, including numerical examples. Click here to access a cost calculator.
How much can I get from Unlock?
Once you create an account, we’ll provide an estimate of the maximum cash available. In general, the maximum amount of cash available from Unlock is $300,000. The specific amount we can offer you depends on four things:
- Your home’s current value. In general, the more your home is worth, the more cash is available.
- Pre-existing housing debt. This includes all mortgages and credit lines secured by your home. In general, the less housing debt you have, the more cash is available.
- Your credit history. A good credit track record may qualify for more cash.
- The use of the property. We can typically offer more cash when the home is your primary residence.
How is this different than a reverse mortgage?
A reverse mortgage is available only to homeowners that are at least 62 years old. An Unlock Agreement has no age requirements. Depending on your circumstances an Unlock Agreement can yield more or less cash to you up front versus a reverse mortgage. With a typical reverse mortgage, you are required to pay off your existing mortgage at closing in order to qualify. With an Unlock Agreement you are not required to pay off your existing 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.
How does Unlock work?
Unlock Technologies is a real estate investor. We pay you a lump sum of cash today in exchange for the right to share in a percentage of your home’s value in the future. We’re not a lender or a bank and the investment we make is not a loan. There are no monthly payments or interest charges – not now, not ever. You can typically 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 your home’s then-current value according to the percentage agreed up front. You can also buy us out based on an appraised value without selling your home. See the Unlock Product Guide for more details.
Are there any restrictions for what I can do with the cash?
In some cases, Unlock Technologies may require you to pay off some debts, or property liens when your Unlock Agreement is originated, but we do not place any other restrictions on the net cash you receive from us at close of escrow.
Which states are you available in?
We currently are available in Arizona, California, Colorado, Florida, Michigan, Minnesota, Nevada, New Jersey, North Carolina, Oregon, South Carolina, Tennessee, Utah, Virginia, and Washington state.
What types of properties are eligible?
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.
How do you know how much my property is worth?
We obtain one or more appraisals, broker price opinions or AVMs (automated valuation model) during the underwriting of your application. Whenever we obtain an appraisal or broker price opinion, Unlock Technologies engages a third-party appraiser or broker to provide a valuation report on your home. This person will always be a neutral service provider, representing neither you or us. Objectivity and accuracy of the appraisal and inspection process is fundamental to the Unlock Agreement, and we are committed to those goals in our standards and procedures, including the following:
- Appraisers must follow the Uniform Standards of Professional Appraisal Practice, all applicable federal or state laws and regulations, and satisfy the requirements of Fannie Mae, Freddie Mac, or FHA.
- Brokers must hold the appropriate real estate license and be experts in the local community.
- Inspectors must be experienced experts in the local community and be licensed where required.
Do you invest in Rental or Investment Properties?
Yes, we do! Pricing is typically higher for a rental property versus a primary residence. Please note that if you hold the rental property in an LLC, we will need to get a majority member’s agreement for the entity that owns the property
Are there monthly payments?
No. But you must pay your mortgage, taxes, HOA dues and other housing obligations just as you normally do.
Does an appraiser and inspector need to enter my home?
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:
- granting full and prompt access to the property.
- making all relevant documentation available.
- ensuring that the home is presented in reasonable condition to be appraised or inspected.
What are the tax implications?
It is our understanding that the cash you receive from us when you enter into the Unlock Agreement should not be taxable at that time, and there should be typical real estate capital gains tax treatment when the Unlock 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 Unlock 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 your advisor directly to answer any questions they may have. Please contact us if you have further questions.
Is Unlock added to the title of the property?
No. We do not become a co-owner and we are not added to the title of your property when we invest in your home. We will put a lien on your property to protect our investment, just like a mortgage lender does. See the Unlock Product Guide for more details.
How long does this process take?
The overall process should take between 30 and 60 days assuming you want to move quickly and subject to how long it takes to get an appraisal and inspection completed. It typically takes about 15 minutes for you to create an account, get credit qualified, complete an application, and upload a handful of documents. Once the application is complete, we will verify the information, and issue an investment estimate with specific but estimated terms and costs of your Unlock Agreement. As part of our commitment to consumer education you will need to schedule a call so we can walk you through your investment estimate, the key mechanics of the Unlock Agreement, and answer any questions you may have. After this call and if you intend to proceed, you’ll sign your investment estimate and we’ll 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. If you wish to proceed you will sign that statement and we will schedule a notary to sign your documents and wire funds to you accordingly. To give you some additional time to consider your decision, we won’t schedule the notary signing any sooner than three days after you sign the closing statement.
How do I apply for an offer from Unlock?
Apply online by creating an account, learning about the Unlock Agreement and the amount of cash available and then completing our application. We typically only ask for a few documents:
- Government issued identification
- Homeowner’s insurance declaration page(s)
- Mortgage statement(s)
- Lease agreements or proof of rental income if applicable
- Trust documents, if applicable
How does it work when I am ready to sell?
You can sell your home whenever you want. You will need to notify us 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 first need to determine the Ending Home Value. The Ending Home Value is typically 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. We will typically obtain an appraisal to provide 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 is a Maintenance Adjustment might be required. These adjustments, when they apply, will impact the Ending Home Value that is used to determine the Unlock Share. 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 Unlock Share are determined, we will provide the escrow company with a settlement statement 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 Unlock, the outstanding balances of any loans secured by your property, and real estate commissions and other costs associated with the sale of your home. See the Unlock Product Guide for more details.
Can I see the legal agreement?
We are happy to provide a sample of the legal agreement to any applicant.
At the end of the term what happens?
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 the term. If you do not sell your home or buy out Unlock by the end of the term (typically 10 years), then you will need to settle up with us at that time by either selling your home or buying us out. See the Unlock Product Guide for more details.
Do you need to do a credit check, and does it affect my credit score?
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.
What if I make home improvements?
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 Unlock Agreement has a provision called the Improvement Adjustment. Here is an example. You enter an Unlock Agreement, and the starting home value is $700,000. Soon after you improve your home by upgrading the kitchen and bathrooms. Your home improvement project costs $50,000. Ten years later, you sell your home for $900,000 (the Ending Home Value). You request an improvement adjustment as part of the sale process. An appraiser determines that the improvements you made ten years ago added $40,000 to the current value of your home. Unlock applies a $40,000 improvement adjustment to the Ending Home Value. The Unlock share is calculated based on a value of $860,000 (we call this the Sharable Value). The result: Unlock does not share in any value created by your home improvements! 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. Note that 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. Typically, improvement projects that taken together have added less than $10,000 to your home’s value do not qualify for an Improvement Adjustment.
What happens if I need to change something on title?
Life events may occur during the term of your Unlock 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 your Unlock Agreement, including:
- Placing your home in a family trust
- Adding or removing one or more persons from the title of your home
- Subordinating to a new loan approved by Unlock
What happens if I fall behind on my mortgage payments or default?
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 your Unlock Agreement you must remain current on your housing obligations and abide by certain other requirements. Defaults are not typical, but life happens, so defaults sometimes happen too. A default can result from a life event like a job loss or serious illness not within a homeowner’s control. Events of default under the Unlock Agreement are similar to events of default under a mortgage loan, and include the following:
- Falling behind on your mortgage, property taxes or property insurance
- Allowing the condition of your home to deteriorate significantly or not restoring your home to its previous condition after damage
- Taking on additional debt or allowing a lien on your home other than as agreed to by Unlock
- Violating home usage law such as using your home for commercial purposes or constructing an addition to your home in violation of zoning restrictions or without building permits
- Becoming insolvent or declaring bankruptcy
- Misrepresenting or omitting material facts when communicating with Unlock
- Attempting to sell or transfer your property except as allowed by the Unlock Agreement
- Not settling the Unlock Agreement at the end of its term
What happens if I do not maintain my property in good condition?
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 Unlock 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 Unlock 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 so we 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. See the Unlock Product Guide for more details.
How does a Partial Buyout work?
It is very similar to an Owner Buyout except you are buying out only a portion of your Unlock Agreement. 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 Unlock Agreement you want to buy out. All Partial Buyouts are subject to our 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). Unlock may decline a Partial Buyout if the remaining Unlock Percentage would fall below 25% of the original Unlock Percentage. See the Unlock Product Guide for more details.
Can I buy out Unlock’s investment in my home?
Yes. You can end your Unlock Agreement without selling your home by buying Unlock out. We call this an Owner Buyout and you can do it at any time during the term. You start the process by submitting an Owner Buyout request to Unlock at least 60 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. These adjustments, when they apply, impact the Ending Home Value that is used to determine the Unlock Share. Once the Ending Home Value and Unlock Share are determined, we will engage an escrow company and supply a settlement statement 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. See the Unlock Product Guide for more details.
How does this affect my heirs?
Yes it can. At the start, all owners of the property (as reflected on title) must be signatories to the Unlock Agreement. If you die during the term of your Unlock Agreement and you are survived by a spouse or other co-owner of your property who is also a signatory, the Unlock 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 required to settle the Unlock Agreement by either selling the home or buying Unlock out. For this reason, it is important that you discuss your decision to enter into the Unlock Agreement with your heirs and executor during your lifetime. They should understand the effect the Unlock Agreement can have on your estate, and if you add a spouse or domestic partner onto the title of your property during the term of your Unlock Agreement, you should notify Unlock so that person can become a signatory. If your heirs are unable to pay the cost of buying Unlock out, they may need to sell the property to settle the Unlock Agreement. Your heirs will have at least 180 days to settle. Unlock may provide additional time (up to 180 days) to complete a sale process if that is the chosen settlement method. See the Unlock Product Guide for more details.
Can I refinance my mortgage?
You can borrow more against your home and/or refinance your existing mortgage subject to the Total Home Finance Limit under your Unlock Agreement. If you get a new loan or refinance an existing one, we may charge an 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 subordinate 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. See the Unlock Product Guide for more details.