You want to purchase a home to improve your financial future, but when you start the process, you discover you have limited options because you only have a small down payment.
While there are some government programs available, there are also private organizations that provide assistance for many different purposes. Unison, for example, offers a program called “equity partnership,” which can be beneficial to both homebuyers and investors.
We are proud to be an approved partner with Unison, and can help facilitate this program, which has many advantages for anyone seeking a home. If you qualify, you may be able to have a better home with a more affordable payment!
Unison’s Equity Partnership: A Strong Opportunity for Homebuyers
What is the Equity Partnership from Unison?
The program is designed to help you get the down payment you need for a home purchase. And as you likely know, down payments can have significant longterm and short-term advantages.
Essentially, it is a transaction where Unison gives you money in return for a share of your home’s value.
Here’s how it works: If you are approved for the program (see below for qualification requirements), Unison contributes a specific amount towards your down payment, usually half of the total down payment. In return, Unison invests in the home with you and receives a share of the change in home value when you sell the house. Depending on the specifics of your agreement, the share is usually 35% of the change. (Not 35% of the total home’s value, only 35% of the difference between the old and new value.)
Unison not only shares the reward, but like a true partner, they also share the risk. If the home value decreases, Unison typically takes a portion of the loss.
There are no monthly payments to Unison. In fact, until the home is sold, which could be decades from now, you won’t owe Unison anything.
Unison developed this system by incorporating extensive feedback from clients and homeowners. They work with lenders who have done thorough investigations in the company before deciding to partner with Unison, giving the program a high level of trustworthiness and reliability. In fact, the Unison programs have an A+ rating from the Better Business Bureau.
Essentially, Unison becomes a partner in your home investment. Both you and Unison hope the home increases in value, as this will bring a higher payments for both you and the company.
Longterm Vision Makes Equity Partnership Possible
This all brings up a fairly common question, however. How can a company wait 10, 20, even 30 years or more without receiving a payment? It’s possible because of who is investing. Money for the investment program comes from institutional investors. This can include many different organizations, such as pension funds and university endowments. Institutions are not typically looking for short-term profits to show shareholders; they are looking for longterm, steady, sustained profits. This is what makes the program possible in the first place.
Advantages of the Program
Generating even a small down payment can be a significant challenge for cash-strapped families all across the country. With the equity partnership, however, you may be able to double your down payment, which has many advantages.
With a larger down payment, it will be easier to qualify for a mortgage, as you will likely be borrowing less total money. Of course, this also means lower monthly payments; it’s possible that Unison could lower your monthly payments by 15 to 20%.
If you are able to bring a larger down payment, you also increase your purchasing power and overall choices. You could have better options for commuting distance, specific school districts, or home sizes. You may even be able to afford the home features you have always dreamed of.
Private Mortgage Insurance, or PMI, is an payment made by homeowners until a certain percentage of the property value is paid for, usually 20%. With a higher down payment, you can avoid PMI, which means your home ownership becomes even more affordable.
How to Qualify for Unison’s Equity Partnership
So how can you qualify for the program? There are some very specific steps you’ll need to take, as well as requirements you’ll need to meet, but the first thing you should do is check whether or not the program is even available in your region. Currently, the program is only available in 12 different states as well as the District of Columbia. States where you can take advantage of the program include California, New York, Pennsylvania, Illinois, and Virginia. You can always check Unison’s website to see if the program is available in your state.
If the program is available in your state, you’ll need to make sure the property you hope to purchase will qualify for the program. In most cases, Unison will invest in primary residence, owner-occupied, single family homes. If you want to purchase townhouses, planned developments, or condominiums, you will likely be unable to use Unison’s program. Rental properties are generally unavailable for the partnership, but it is possible to use the system for owner-occupied second homes.
Unison will look at every property differently, but they prefer to invest in homes that are typical for the area, with sizes, values, and characteristics that are common to the neighborhood. For example, if the neighborhood generally holds three-bedroom ranch houses worth around $200,000, Unison likely won’t invest in the only eight-bedroom, $500,000 home in the area. This is because extremely-unique homes do not generally appreciate in value as well and are often harder to sell.
Personal Factors for Qualification
Okay, so you live in a state where it’s available and the home in question should qualify. What other qualifications do you need to meet? Unison will often want to check your credit score to start the process. The credit check will usually happen right after you submit an application. They will want to see a FICO score of 680 or better.
They will also need information on your personal finances, including credit history, income, and assets. They will want to see a debt-to-income ratio of 43% or less, as well as strong history of credit payments.
There are, unfortunately, certain personal disqualifications. If you have a felony on your record, you will not qualify. Other disqualifications include a 60-day late mortgage payment in the past 12 month or any past foreclosures.
If the home in question and your personal situation allows, Unison’s Equity Partnership program can be a significant benefit to you and your family!
“Chad – Your team has been nothing short of amazing. Juliann has aggressively followed-up with escrow and gone out of her way to make sure things get done on schedule. Matt and I can’t express to you enough how much we’ve appreciated all of your counsel at the beginning of the process and her execution to see it through to close. As always, appreciate everything that you guys have done to see this through.”
A very responsible and experienced professional with his highly effective team
I really enjoyed working with Chad Baker and the rest of the team. This was our first time buying a home in California and we started with unnecessary assumptions based on our previous experience as home-owners in a different state. Chad and his team were available throughout the whole process, explaining the state differences, answering all our phone calls and emails quickly and directly, and providing detailed weekly status reports so that all parties including agents knew exactly where we were in the process. Chad was very experienced and provided customized loan products for us to consider, which definitely facilitated our transaction. I recommend the Chad Baker team! ”
I was referred to Chad by my Realtor for a purchase of a new house. The experience with Chad and the team (I mainly worked with Juliann) was nothing short of outstanding. From start to finish there were always quick to respond and when needed, notify me of any new documentation that was required. There were very helpful explaining to me the pros and cons of different financing options as well as some other loan related issues, such as termite clearance outside the purchase contact and septic tank certification process. Overall, very knowledgeable and processional team. Loan preapproval was done in a single day and loan documents were ready for signing in 21 days, which was 9 days ahead of schedule. That never happened to me before.