In the market for a new home or to refinance? It’s no secret that the housing market may be less than ideal for the average homeowner at the moment. Interest and mortgage rates are climbing at an exponential rate, leaving many with no options in traditional channels to achieve their financial and housing needs.
According to a study by the online real estate broker Redfin, American homebuyers have lost up to $165,000 in purchasing power on new homes in the last year and the share of affordable homes nationwide fell by 16%. A $517,500 mortgage last year would equate to around $399,750 as of June this year. Americans are getting far less for their money than they were a year ago and buying or refinancing a home has become more painful than ever.
What About Refinancing?
If you need cash to reach other financial goals, you may be looking into refinancing your current mortgage regardless of skyrocketing interest rates. Unfortunately, the strict qualification process that lenders will put you through is causing a trapped equity crisis with American homeowners’ hard-earned equity.
Here’s a look at the requirements and current process:
- A maximum debt-to-income ratio of 50%, but some are as low as 43%.
- A maximum of 80% loan-to-value
- A credit score of 620, but many lenders are currently requiring a higher score
Say you’re looking to refinance a home with a $400,000 mortgage loan. A 3% interest rate would mean a monthly payment of $1,350 before taxes, HOA, insurance, and accounting for yearly maintenance. A 7% rate, which is where most homebuyers are currently sitting, would be a $1,620 monthly payment. That’s a 20% increase in the monthly payment from interest payments alone. If you’re a family that makes $80,000 a year, this means a 9% difference in DTI and can severely limit the maximum cash you can access from your equity. Learn more about whether or not refinancing your mortgage is a good option for you.
America’s Trapped Equity Crisis
A trapped equity crisis is as it sounds: average homeowners are unable to access their equity because of macroeconomic issues impacting lenders. These same lenders have offered little in the way of new or better solutions to the growing number of homeowners who are being shut out of the traditional options.
Ribbon is solving this crisis. We’ve creates an entirely new solution that can provide a way to convert your equity and reach your financial goals while mortgage rates continue to climb higher.
Ribbon’s Alternative Solution to Climbing Mortgage Rates
If you’re looking for a new and innovative way forward that doesn’t require the strict qualifiers that a traditional solution does, you’ve found it. Ribbon offers Sell & Stay, an innovative sale-leaseback that provides you with:
- 100% of the home's appraised value with up to 75% in cash funding
- The unique benefit of repurchasing at any point, or receiving future home appreciation through an open-market sale
- Instead of paying your mortgage, HOA, taxes, and home insurance payments, you only pay a set monthly rent to continue to live in the home
- A monthly rent payment likely comparable to the cost of a refinanced mortgage payment and, in some cases, can be even lower
- Home maintenance. As a tenant, any future home maintenance is covered by Ribbon, taking the stress out of those unexpected expenses.
So how do you qualify for Ribbon’s Sell & Stay solution?
Our process is unlike any other. Since we’re not a loan, we’re not interested in your current credit score and don’t have any debt-to-income requirements. Our main qualifier is simply the amount of home equity in your home and your ability to cover a much more lenient rent-to-income ratio, which does not take your debts into consideration. The amount of cash you receive is not based on other financial factors and is purely dependent on the value of the home.
Refinancing while mortgage rates are around a twenty-year high means you can expect higher monthly payments. Ribbon offers an alternative solution free from interest rates, with an option to buy the home back when you’re ready. Take your time and wait for rates to come down.
If your home is worth at least $150,000 and you have at least 60% equity in it, Ribbon wants to hear from you. Let us provide you with the best solution for your needs. If you qualify, we’ll purchase your home. Any remaining mortgage balance will be cleared. You’ll receive the cash left over and a lease to stay in the home.
Use the funds to work off any debts, reach financial stability, or use it toward your next home when you’re ready to get back into the market.
Key Takeaways
Don’t let high mortgage rates, strict lender requirements, and your current loans keep equity your equity trapped in your home. When buying a new home and refinancing feels like an impossibility, Ribbon can be your answer. Stop wading through the endless sea of bad news and rejections and contact Ribbon today.
Sources:
- CNBC. Rising interest rates have cost the typical homebuyer up to $165,000 in purchasing power since last year.
