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Power buyer Knock says it will now work with any lender or agent to help homeowners leverage the equity in their existing home to buy before they sell.
Homebuyers can use the Knock Home Swap Equity Advance in conjunction with a purchase loan from any lender to make a non-contingent offer when buying their next home. Or, the equity advance can be used to buy down their mortgage rate or make a down payment or on their next home.
Knock charges a 2 percent contract fee based on the list price of the old house, which works out to $9,000 on a $450,000 home, the average for Knock clients.
A non-contingent offer is required for the Home Swap Equity Advance. If the borrower already has one in hand, they’ll be assessed a 4 percent origination fee for their equity advance. A $35,000 equity advance — the maximum that can be applied to home prep costs — would have a $1,400 origination fee.
The Knock Home Swap Equity Advance loan was originally introduced to help Home Swap clients prepare their existing home for market by making basic repairs, small finish upgrades, painting and other prep to help generate better offers and a faster sale.
Sellers still have that option, but can now work with any agent or finance their purchase with virtually any lender.
Sean Black
“By partnering with lenders, we are making it easier for consumers to get the benefits of leveraging the equity in their current house to buy their dream home without any of the hassles that typically come with buying and selling, including the ability to avoid moving twice and living through repairs and showings,” Knock co-founder and CEO Sean Black said in a statement.
Knock provides access to an approved contractor network and manages payments out of the homeowners’ equity. The company also provides a backup offer on the old house if it doesn’t sell within six months.
To qualify, the home that’s being sold must be located in one of 75 markets where Knock operates. The new home can be located anywhere in the U.S.
The Knock Home Swap Equity Advance can be combined with most conventional and jumbo purchase loans, but not FHA and VA-backed mortgages.
Homebuyers who want to finance their purchase with Knock and use their equity to buy down their interest rate also have that option.
Knock introduced an interest rate buy-down option last summer as mortgage rates were climbing that also lets homebuyers to use the equity in their existing home to make a bigger down payment on their next one.
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