HOUSTON - As Wells Fargo and JPMorgan Chase have stopped offering home equity lines of credit due to market uncertainty, some homeowners are finding new ways to tap into their home equity to help them through the financial crisis.
You may have heard of a leaseback on commercial property. This is the same idea for homeowners. You can sell your home, pay rent to stay there, and choose to buy it back later.
"Once I got my new townhouse, I realized there was quite a bit of work, and I needed to tap into the equity of my townhouse," said Jennifer, who lives outside Dallas.
To fix up her fixer-upper, Jennnifer says she sold her townhouse to EasyKnock, but kept living in it while paying rent.
"They purchased my house and they set a lease price for me, and it could be extended. Mine was for two years. But there was the option to purchase, so actually what I've ended up doing is purchasing my house back. I just did that last week," said Jennifer.
EasyKnock buys homes, then rents them back to the owners so they can stay in their homes.
"We buy their home, they get a lease, they rent it back. At any time they can choose to move or buy it back. But they can also rent in perpetuity," said EasyKnock co-founder and CEO Jarred Kessler.
Kessler says EasyKnock buys the home for the full appraised value, giving the homeowner 70% of the price. And he says that's what they'll pay to buy it back.
"If they have a $100,000 home, and we gave them $70,000, that's going to be the buyback price no matter what the market does," said Kessler.
If you sell the house later, and it has appreciated, you keep the profit.
"So if the house is worth $100,000 and in three years they sell it for $120,000, and we gave them $70,000 when they go to move they get $120,000 minus $70,000," explained Kessler.
Kessler says rents are set at market rents in your area. And EasyKnock pays the property taxes, homeowner's insurance, HOA fees, and essential repairs.
"We are an anti-predatory model and we pride ourselves on our reputation," he said.
Jennifer says the process was hassle-free.
"The positive would be you don't have to get your house sale-ready. Realtors won't be bringing people to come and look at your home. It was very convenient and fast," said Jennifer.
Another company called Rentback finds a property investment company to buy your house and rent it back to you. Check out your options and know the terms of your deal.