Repayment of loan
Unlock Technologies places a lien on your property once you sign a home equity cash-out refinancing contract. If you choose to, you can begin buying off Unlock’s ownership in your home with partial payments or a flat sum after six months. When your 10-year contract expires, you will have to buy Unlock out or sell your home.
You will not be expected to pay any monthly payments. However, you will be responsible for a 3% origination charge and the costs of appraising and inspecting your home each time you make a buying-out payment.
Steps to repay
When paying off Unlock, which is also called Partial Buyout, these are the steps to follow.
You have 6 months after receiving funds from Unlock before repayment can commence, and you can buy them off.
An appraisal of your home is done.
You identify your intention as partial and let them know what portion of your Unlock percentage you want to buy out and set the repayment period. For example, if your starting home value was $400,000, you received an investment payment of $65,000, which is 16% of your home’s value. Unlock has set the exchange rate at 1.6, meaning your Unlock percentage is 25.6% (16% X 1.6). Therefore, if you paid half your Unlock percentage, you would have to repay $51,200 (25.6%/2X $400,000).
If your house has appreciated in value, say up to $425,000, the partial buyout also increases. Instead of paying Unlock $51,200, you will instead pay $54,400 (12.8%X 425000).
If your house value depreciates, Unlock calculates the current home value. That is, if an appraisal is done and the value of your house is $350,000, you will make a partial buyout at $350,00, not at $400,000.
Upon making this payment, your Unlock Percentage is reduced from 25.6% to 12.8%, and your Unlock agreement continues until it falls below 25% of your original buyout.
Then you settle the remaining amount.
Suppose you do not want to buy out Unlock. In that case, before the 10 years are over, as long as you keep paying your mortgage as agreed upon, including all other expenses involved in your house like taxes, you can sell your house, and Unlock Technologies can receive its share of the value through the escrow process. However, Unlock will not receive its share at 16% of your current home value but at 21% as you had agreed earlier.
Conditions of loan extension
If you start making payments to Unlock but have to stop due to unforeseen circumstances, you may be eligible for a loan extension if you contact them sooner. Unexpected instances in which Unlock may consider extending your loan include job loss or severe sickness, both of which are beyond your control.
Early payoff
When you decide to repay your debt, you will need strategies to help you accomplish it as debt repayment may be a time-consuming and difficult process. As a result, you should look for a strategy to expedite the process and get out of debt quickly to buy out Unlock early. If this is the case, the following tips will help you reduce your financial burden by paying off your debt more quickly:
Create a spending plan and stick to it. Make a budget for your expenses, including monthly bills, and leave enough money for savings and emergencies.
Make a strategy. Determine how much money you owe and the types of debts you have (credit cards, student loans, car payments, home equity cash-out refinancing).
Make a plan to pay off your debts. Avoid credit cards with high-interest rates because they are one of the most significant monthly budget drains.
Cut back on discretionary spending. This entails spending such as going out to eat, shopping for clothes, or buying new electronics until your debt is paid off fully. It can help you keep excessive spending in check while paying off existing debts faster than usual.
Make a monthly contribution to an emergency fund. This way, you can deal with any unforeseen expenses without getting into debt, which gives you peace of mind.
Consider having a side hustle if at all possible. You can start freelancing to pay off other bills, like medical bills or car maintenance; once those are paid, you can use the extra money to pay off your Unlock early loan.