Owning a home can offer a lot of financial freedom, but it can also be a burden. Mortgages become unaffordable and people default, putting themselves at risk of foreclosure. That’s a difficult position to be in, especially when life events like a job loss, family death, or divorce make it difficult to pay a mortgage.
Many homeowners decide to turn to their home equity for help getting through financially difficult times, but even that can be a struggle. To qualify for a home equity line of credit (HELOC) or home equity loan, a homeowner typically needs to have at least 15% to 20% equity, a debt-to-income ratio (DTI) of 43% or lower, and a credit score in the mid-600s or higher.
Sometimes, homeowners decide to sell to liquidate their equity. But what if they need some of that money to make a down payment on a new house? They’re left with a difficult choice — rush into selling too quickly so they can get that money, or wait and possibly lose out on the perfect home.
Ribbon understands how difficult things can get for homeowners. That’s why they've established Sell & Stay and MoveAbility, two innovative sale-leaseback programs designed to give homeowners the freedom they deserve.
What Is Ribbon?
Ribbon has been offering flexibility to homeowners since 2016. Founders Jarred Kessler and Ben Black saw that people buy homes and spend years building up equity, only to find that they can’t access that equity without getting a loan or moving out. They then created Ribbon with the mission of empowering homeowners to improve their own lives by converting their equity to cash.
Ribbon isn’t the only company out there getting homeowners their home value, but it’s one of the only options that puts homeowners first. Lenders, to whom many homeowners turn first for equity access, require homeowners to repay the money with interest. It’s only a temporary solution.
Folks who want to sell their homes may instead turn to iBuyers, a relatively new model in which an investor makes an instant offer so the seller can collect their money quickly. The trouble with this model is that the iBuyers then own the home and the homeowner has to move out.
Other homeowners turn to fractional ownership solutions, which take on part-ownership of a property. The homeowner gets their equity free and clear, but it’s usually no more than 20% of the home’s overall value. Ribbon can provide homeowners with the full value of their home through a combination of cash and an option.
Ribbon is on the homeowner’s side from beginning to end. That’s why the company offers two separate programs, one for those who want to stay in their homes and one for those who want to move.
Ribbon’s Sell & Stay
Sell & Stay is Ribbon’s original sale-leaseback program. The model is simple: Ribbon buys the house and leases it back to the seller, so they get to remain in place as a renter.
As part of the agreement, Ribbon pays the homeowner up to 70% of the home’s total value in cash. The remaining value is provided as an Ribbon Option, which allows a homeowner to re-purchase the home or have Ribbon sell it on the open market. Meanwhile, Ribbon pays all property taxes and homeowner’s insurance on the property — the original homeowner only pays the agreed-upon market rent and renter’s insurance.
With Sell & Stay, there’s no rush. The homeowner can keep renting and eventually move or repurchase as it suits them. It’s an ideal solution for people who are looking to convert their equity to cover major expenses, ride out a difficult financial time, or fund a new business venture.
Sell & Stay isn’t a loan, so there’s no strict credit or income requirement. Ribbon is more concerned with a home’s value and the amount of equity that the homeowner has.
Ribbon’s MoveAbility
Ribbon started with Sell & Stay, and then found that many people didn’t want to remain in place indefinitely. They just needed to stay long enough to get a mortgage and close on a new home.
It’s much easier for someone to buy a new home once their existing property has sold. Otherwise, the potential buyer has to show that they can afford both mortgages, since the loan on the person’s initial home is still active. The other option is to rent a temporary place in between moves, which can be an enormous hassle.
MoveAbility is a much easier solution. Ribbon buys the homeowner’s property and pays off the mortgage. The homeowner converts an agreed-upon percentage of their equity to cash, which they can use to make a down payment on a new home.
With the money they receive from Ribbon, aspiring buyers can usually make a larger down payment than they could otherwise afford. This translates to a smaller amount borrowed, which means less accrued interest overall. Higher down payments may also qualify some buyers for lower interest rates and can exempt the buyer from mortgage insurance if the total down payment is more than 20%.
MoveAbility lets homeowners enjoy all of these benefits without the hassles of interim housing or conditional offers (“you can have this loan once you sell your current home”). Ribbon even works with the homeowner's choice of realtor to sell the home when the time comes, so homeowners can focus on moving.
Returning Control to the Homeowner
Ribbon believes that the equity people have worked so hard to build shouldn’t be locked in their homes. They know how much of an issue it can be to find a home equity lender when there's an urgent need for money, especially when someone is dealing with a divorce or other change in life circumstances. When a homeowner’s life is filled with uncertainty, Ribbon offers Sell & Stay so that there are fewer hoops to jump through.
Ribbon also understands that selling and buying can be as complicated as owning — if not more so. Timing is everything, and homeowners can’t always sell their existing properties before they make an offer on a new one. MoveAbility provides a non-lending bridge product.
Key Takeaways
Both programs bring control back into the homeowner’s hands, where it belongs. Talk to a financial advisor on whether a sale-leaseback might be a good option for you. Learn more today and get started with Ribbon.
