Innovative Down-Payment Program Helps Home Buyers Afford Expensive Homes
Unison Offers Innovative Solution for Home Buyers Struggling with Down Payments
When Ricardo and Catherine Soto were in the market for a new home in Chula Vista, they found themselves facing a common dilemma – they could only afford a down payment of about 10%, well below the recommended 20% threshold. This meant they would have to pay for mortgage insurance, adding hundreds of dollars to their monthly expenses.
However, the Sotos found a unique solution to their problem. They partnered with Unison, a San Francisco-based company, which offered to match their $65,000 down payment in exchange for a stake in their home. This arrangement allowed the Sotos to reach the 20% down payment mark without having to borrow more money or tap into their savings.
Unison’s program is designed to help buyers afford homes in today’s expensive market, where high prices and tight lending standards make it difficult for many to save up for a down payment. The company works with mortgage lenders to offer its down-payment program to buyers seeking ordinary home loans, with Freddie Mac even participating in a limited pilot program.
While Unison’s program offers a way for buyers to get into homes they might not otherwise afford, it does come with a tradeoff. Buyers give up a portion of the value their homes might gain in exchange for a smaller mortgage. This means that when the home is sold, Unison will receive back its initial investment plus a percentage of the home’s appreciation.
Despite the potential drawbacks, the Sotos found the arrangement to be a good fit for their situation. With three teenagers heading off to college, they valued the lower monthly payment and the absence of mortgage insurance. Unison’s program allowed them to save about $700 a month, providing much-needed financial relief as they navigate the costs of higher education.
Unison’s co-chief executives, Jim Riccitelli and Thomas Sponholtz, believe that there is a significant demand for their down-payment program, both from home buyers and institutional investors. While the program may not be suitable for everyone, it offers a creative solution for those struggling to afford a home in today’s challenging market.
Overall, Unison’s innovative approach to down payments is providing a lifeline for buyers like the Sotos, offering a path to homeownership that might otherwise be out of reach. As the housing market continues to evolve, programs like Unison’s could play a crucial role in helping more people achieve the dream of owning a home.