How can borrowers tap their equity if they don’t qualify for a HELOC?

by Ryan Smith30 Jan 2018
The amount of equity Americans have in their homes is at an all-time high. At about $17 trillion, that’s a lot of equity that could be working for homeowners. But if they’re not eligible for a traditional reverse mortgage or home-equity line of credit, how do they put it to use?

“People have this equity, but they don’t know how to tap it,” said Jarred Kessler, co-founder and CEO of EasyKnock. “We’re trying to provide a solution for people to tap that equity.”

EsayKnock’s Sell & Stay Principle product allows homeowners to sell their homes, then rent them back for a period of time, continuing to live in them while tapping their equity.”

“We’ve seen the success from people who have that equity but couldn’t extract it,” Kessler said. “We give people the best of both worlds – they can sell it and have all that appreciation, and they have a buyback option if they change their mind.”

EasyKnock also gives mortgage professionals an avenue to help clients who might not qualify for more traditional equity-tapping products like HELOCs and reverse mortgages.

“Sometimes you can’t get all of the cash out of your home in those alternatives – but more importantly, there’s a big group of people who are asset-rich and cash challenged, and can’t qualify for those,” Kessler said. “…Mortgage professionals are seeing a lot of rejected clients because lending standards are becoming more stringent. They now have a way to leverage those clients who are rejected into a new channel. They can get a referral fee when we work with them on these clients. We’ve seen a lot of success with that. As of today, they’re throwing those (leads) in the garbage, and we’re offering them a way to capitalize on them.”

Kessler said that EasyKnock preferred to work with homeowners whose mortgages had loan-to-value ratios of 60% or less. If those homeowners had trouble tapping their equity through more traditional means, EasyKnock’s buy-leaseback program might be what they were looking for.

And the potential market is a sizeable one, Kessler said.

“From what we’ve learned, 80% of reverse mortgage clients are getting rejected, and half of HELOC clients are getting rejected, so that’s probably an $11.5 billion marketplace,” he said.

And with recent tax-law changes, renting is becoming more attractive to many. The doubled standard deduction basically neutralizes the benefits of the mortgage-interest deduction for all but the wealthiest homeowners.

“With the new tax plan, it might just become more beneficial to be a renter,” Kessler said.

Especially when doing so can allow people to tap into their equity.

“People’s biggest assets are their homes – and their equity is their biggest source of funding,” Kessler said. “To not be able to use that equity is a shame.” 

To learn more about EasyKnock’s Sell & Stay referral program, originators can call 646-375-2330.

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