Balance Homes is a new product option currently available in Illinois, Georgia, Minnesota, Florida, and Texas. The idea behind Balance Homes is that it’s a way for homeowners to refinance when they otherwise struggle to do so. You can own your home without taking on traditional mortgage debt.

Balance works with owners by co-investing in their homes, and they pay off the mortgage in full.

So what does Balance get? They receive a portion of your home equity. Balance says the hope is to provide new opportunities for underserved owners and communities who might otherwise not be able to stay in their homes.

Using Balance, you make monthly payments on your home as a homeowner, and those payments are similar or perhaps lower than a regular mortgage. You have the flexibility to skip cash payments, and you can then pay with a home equity withdrawal instead.

If you’re the homeowner, you can buy equity shares of Balance at any time, lowering the monthly payment amount.

Like a conventional mortgage, Balance lets you live in your home and make improvements as you want with the product platform. Then, you can repay the investment Balance made through refinancing or selling your home when you choose.  

The idea is to deliver forbearance relief to people who wouldn’t qualify otherwise.

A representative from Balance spoke in a recent press release from the company, saying that typically, all the available options for homeowners increase their long-term debt without flexibility. The representative went on to say homeowners don’t usually have flexibility.

He said the Balance company wanted to give another option to help homeowners as they stabilize, without taking on more debt and providing flexibility to stay in their home and keep their equity.

According to the company, you can lower your payments up to 30% compared to your current debt payments and mortgage.

If you own your home and have a traditional mortgage, you’ve built up at least 10% home equity, and you need cash access to pay off debts, or for some other reason, you might think about Balance.

This touched on above but you can sometimes skip cash payments when you need to—up to four times a year. You have a fixed monthly payment, and you get cash out at closing while qualifying with low credit.

Since Balance is a co-investor, they share in both the appreciation and deprecation of your home. Terms last for at least five years, and then after that period, Balance reviews the monthly payment and adjusts it based on market rental rates in your area, with a maximum 5% annual adjustment.

You have to pay a service fee if you use Balance, similar to closing costs. You can pay all expenses with a portion of your home equity, though.

When you agree, Balance sets a starting price for your home and then adjusts it up or down every three months, based on the Federal Housing Finance Agency home price index for your metro area. Any appreciation that goes above this value is yours.

Balance makes their money in a few different ways. First, they charge a one-time shared ownership entry fee of 2.5% of your home’s value, and you usually pay this as home equity rather than cash. You also pay a fixed monthly fee to Balance to live in your home, and if you end your agreement, the company calculates the increase or decrease in your home value.