By Peter Rudegeair and Christina Rexrode Feb. 18, 2018 7:00 am ET Some well-funded startups have an unusual pitch for homeowners strapped for cash: Let’s own this house together.
In those cases, home buyers get money for part of their down payment in exchange for pledging some of the home’s future price appreciation. The firms market them as a better alternative to low-down-payment loans, since they can give consumers more buying power without requiring them to take out pricey mortgage insurance.
Dr. Nizhnikov, 46 years old, said the idea of sharing ownership of his home at first was a bit disconcerting. One thing that won him over: If his home’s value falls, Unison shares in the loss. “We get to feel comfortable, just in case something crazy happens,” Dr. Nizhnikov said. And if the home goes down in value? Unison shares in the loss, but not all of it. Say the home sells for $400,000. After paying back the $400,000 mortgage, the homeowner’s $50,000 in equity is wiped out. Unison only shares in 35% of the loss, preserving some of its equity. That means the homeowner is on the hook for the difference and needs to pay Unison $15,000.
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