Home Equity Options Explorer
Unison faces another class-action lawsuit in North Carolina. If you're considering a home equity agreement, understand the trade-offs first. Compare equity sharing, HELOC, home equity loan, and cash-out refinance with your actual numbers.
How to Read This Comparison
Equity Sharing (Unison-style)
You get cash now in exchange for a share of your home's future value change. No monthly payments, but you give up 16-25% of appreciation (or share losses). The investor gets their share when you sell, refinance, or at term end (typically 30 years).
- No monthly payments, no interest
- Cost scales with home appreciation
- Can be expensive in hot markets
- Class actions allege misleading cost disclosures
HELOC (Home Equity Line of Credit)
A revolving credit line secured by your home. Variable rate tied to prime. Draw period (typically 10 years) then repayment period. You only pay interest on what you draw.
- Variable rate, currently ~8.5-10.5%
- Interest-only during draw period
- You keep all appreciation
- Risk of payment shock after draw period
Home Equity Loan
Fixed-rate lump sum second mortgage. Predictable payments for 10-30 years. Rate higher than first mortgage but fixed.
- Fixed rate, currently ~8.5-10%
- Predictable monthly payments
- You keep all appreciation
- Higher rate than HELOC initially
Cash-Out Refinance
Replace your first mortgage with a larger loan. One payment, but you reset your rate and term. Only makes sense if new rate beats your current rate.
- Single loan, one payment
- Rate applies to entire balance
- Closing costs 2-5% of loan amount
- Only worthwhile if rate improves