Better Mortgage has launched a new product called “Equity Unlocker” to help Amazon employees buy homes.
The innovative credit program allows borrowers to pledge collateral equity instead of a traditional down payment.
This means a homebuyer can come to the closing table with a $0 down payment, but borrow like a 20% down payment.
Because many Amazon employees are paid overall in good stock. Thus giving them the opportunity to buy a house without having to sell shares.
The Better Equity Unlocker is available in Florida, New York and Washington for current (and former) Amazon employees with an interest in Amazon.
What is Equity Unlocker?
Better Mortgage’s Equity Unlocker allows Amazon employees to pledge shares of vested companies to make a down payment on their home.
instead of having to sell shares (This may happen at inopportune times.) They can pledge shares at a 50% upfront rate.
For example, $200,000 in Amazon stock is equivalent to a $100,000 down payment.
And unlike other products such as margin loans, The terms of the loan will not change if the value of the shares does not change.
Amazon stock was worth at the time of home appraisal. And the rates and terms of the mortgage can be locked accordingly.
This means that you won’t be surprised if the stock’s value will change in the future, along with a 30-year fixed loan.
Better, however, charges a premium for mortgages with shares pledged by employees.
Rates can be anywhere from 0.25% to 2.5% above Fannie Mae’s market rate, depending on the down payment structure.
The trade-off is its ability to sustain Amazon stock that has fallen sharply late in the year. hoping that they will return to their previous highs over time.
How does Equity Unlocker work?
First, Amazon employees (or anyone who owns the shares) will be pre-approved through the Better Mortgage website.
The mortgage advisor then verifies the number of shares each Amazon has through the broker statement they send.
The borrower then chooses the number of shares he/she wants to pledge as a down payment for the purchase of the house.
as specified Vested stock has a 50% pre-rate, so $2 in Amazon stock is worth $1 as a down payment.
Customers can offer a down payment of a combination of cash and Amazon stock, and can easily swap these inputs to determine the cost or amount they can pay.
It is possible to drop cash if desired. but must place a down payment of at least 20% (only through collateral if necessary)
The loan amount is determined by what is pledged as seen in the image above.
Because the stock pledge is not a sale. Therefore, it is not considered a taxable event, according to Better.
When it comes to shares, they cannot be sold or sold back. Unless you pay off or refinance a securities-based loan.
A traditional mortgage refinance should do the trick. Although you will need a minimum capital in your home to qualify.
Where is it available?
Although initially available in three states, But it is expected to launch in more states in the second quarter of 2023.
Those states are Alabama, Alaska, Arizona, Arkansas, Colorado, Connecticut, Georgia, Indiana, Iowa, Kansas, Kentucky, Massachusetts, Minnesota, Nebraska, New Hampshire, New Jersey, New Mexico, North Carolina, Oklahoma, Oregon. Pennsylvania and South Carolina, Virginia, West Virginia, Wisconsin, and Wyoming.
The Equity Unlocker can be used for all types of properties. including the main residence vacation home and even investment properties.
Borrowers must have a minimum FICO score of 680 and loan limits are $3 million for first and second homes and $2 million for investment properties.
Better has been an Amazon Web Services (AWS) customer since the company launched in 2015.
And their digital credit building system, Tinman, is entirely powered by AWS.
This existing connection has allowed the two companies to find new ways. in expanding relationships
and knowing that many Amazon employees are being paid for their inventory instead of cash. It’s reasonable.
Since its inception, Better Mortgage has funded more than $100 billion in home loans.
In 2021 alone, the company has about $47 billion in mortgages, per HMDA data. They are among the nation’s top 25 mortgage lenders.
However, like other mortgage companies, they have struggled with much higher mortgage rates lately.
