Knock Home Swap™ Equity Advance
What is Knock?
It allows a home buyer to purchase a new home before selling your current home, without having to count the current home or bridge loan in your qualifying ratios for your new home.
How does is work?
Based on the equity you currently have, Knock will get you pre-approved for the Equity Advance to cover a down payment up to 30% and the closing costs on your new home so you can start making offers fast.
Your offer can be made with no sales contingency. As part of the program, you'll receive a Purchase Offer for your old house to qualify for your new home and the Home Swap Equity Advance.
Once you close, you’ll pay your new mortgage while we cover the old one (if needed). We’ll advance up to $35,000 to get your old house ready for listing on the open market so it sells fast and for top dollar. When your house sells, you simply pay Knock back for the loan provided. It’s that simple!
What is the Knock Purchase Offer?
One of the most important components of the Home Swap Equity Advance, as it's an offer to purchase your old house if it doesn't sell in 6 months. This allows you to qualify for the new home and is designed to ensure all liens on your old house are paid off - think of it as a safety net if your house doesn't sell for whatever reason.
Is the Knock Purchase Offer required?
A non-contingent offer is required in order to qualify for the Home Swap Equity Advance and to buy your new home before your old house has sold - the Knock Offer is the convenient solution! The Knock Purchase Offer is designed to provide the security of knowing you have an offer in hand that will pay off all liens against your property, and to meet the guidelines for the Equity Advance and your new home's mortgage. However, we want you to get top dollar for your old house so even if you execute the Knock Purchase Contract, which will be at 75-80% of your current market value, it's not a requirement to exercise this offer if your house hasn't sold after 6 months. Think of the Knock Purchase Offer as a back-up.
Can I buy new construction through the Home Swap Equity Advance?
Yes, absolutely! Keep in mind that the Equity Advance will provide funds at the closing of your new home, so you'll be responsible for any charges prior to closing.
Home Prep: what do these funds cover, and how does that process work?
Home Prep covers cosmetic improvements that your agent might suggest to help you net top dollar when you sell your old house. Knock onboards your contractors directly, and pays them after you’ve signed off on the completion of the work.
What are the fees associated with the program?
Knock charges a 2% contract fee based on the list price of the old house plus $1,750 closing costs. You can pay this through your Equity Advance Loan or with your own funds.
What happens if my old house doesn't sell on the market?
You will list your existing house after you’ve purchased and moved into your new home. The goal is for you to sell your listing on the market for max value with your agent. That said, on the off chance your listing doesn’t sell on the market, you’ll have the option to exercise the Knock Purchase Offer that we provided you up front. The Equity Advance covers 6 months of mortgage payments on your old house and also matures at the six month mark, so you'll be responsible for paying your old mortgage as well as paying the Equity Advance. If your home is already listed - that's perfectly fine!
Do I have to make two mortgage payments?
With the Home Swap Equity Advance, you only pay one mortgage at a time. You’ll pay the mortgage on your new home, immediately building equity, while Knock covers the monthly mortgage payments on your old house by setting aside 6 mortgage payments from your Equity Advance and pre-imbursing the payments to you prior to their due date.
Can the Home Swap Equity Advance be used for condos/townhomes?
Most single family properties, townhomes or detached homes, are eligible.
Multi-family properties, deed restricted, and condos are ineligible.
Will my clients home qualify for the Home Swap Equity Advance?
Most homes will qualify for the Home Swap. Some things that would impede a home from qualifying would be significant water damage or foundation damage, a lack of recent similar sales data nearby, unpermitted additions, or if a home is a distressed sale or bank owned.
How does the down payment advance, home prep money, and old mortgage coverage work?
Knock qualifies you for and provides a bridge-like loan that we call the Knock Home Swap Equity Advance.
This equity advance is an interest-free loan that allows you to access the equity in your existing house now, before you sell, so you can buy your new home.
These funds will be applied at your new home closing for a down payment up to 30% on the and pay the closing costs, provide up to $35,000 in home prep funds to prepare the old house for listing as well as make 6 months of mortgage payments on the old house, and may also be used to pay off debts.
Each month following the closing on your new home, Knock will pre-imburse you to pay your old mortgage payment. These funds will be wired to you on or before the mortgage payment due date, but it does take several days to setup.
If your purchase closing is at the end of the calendar month, you will likely receive the first pre-imbursement between the 1st and the 10th of the following month.
Can the Home Swap Equity Advance pay my earnest money deposit?
Your Equity Advance will provide funds at the closing of your new home purchase, so you'll be responsible for any deposits or charges prior to the closing such as earnest money deposits, appraisal fees, or option fees... even if your Home Swap Equity Advance can cover the entire down payment and closing costs. Discuss with Ray to ensure you're properly budgeting an amount for these deposits and charges prior to your closing.