Boston fintech Knox Financial plans to expand its lending business and lending products with $50 million in funding received from a real estate advisory firm.
Based in New York Saluda quality provided the term capital funding that Knox will use to expand its lending business in Georgia, Knox representatives said Wednesday. The fintech will also offer additional lending products, including home equity lines of credit (HELOC), new purchase loans, and cash refinances.
“A homeowner’s best investment is the home they live in – far better than the returns we’ve seen in the stock market in 2022, and a great hedge against record inflation,” said co-founder David Friedman. and CEO of Knox Financial.
Established in 2018, Knox aims to help manage residential rentals with its algorithm-based platform. Its rental pricing and projection model also calculates the rate of return an investment property is expected to produce over time. When a property is listed on the platform, Knox automates and oversees the property’s finances and taxes, insurance, rental, banking and bill payment, according to the company’s website.
The funding comes shortly after Knox launched its first mortgage product, dubbed the Knox Equity Access Program (KEAP), in April. KEAP loans give homeowners access to capital, based on the home’s equity, to turn it into an investment property with Knox. Homeowners can then use their KEAP loan to fund a down payment on their next home and to pay for repairs to their investment property.
In return, Knox charges origination fees and third-party fees to the borrower. Knox also retains 10% of rental income generated by properties listed on its platform.
Prioritizing home equity solutions in a rising rate environment
The housing market in 2022 has been highlighted by spikes in interest rates and falling refi, and lenders are working hard to adjust to new borrower trends. HousingWire recently spoke with Barry Coffin, Managing Director of Title/Housing Equity Closing at ServiceLink, about how lenders can take advantage of these trends by improving their home equity solutions.
Presented by: Service Link
Knox’s expansion comes amid a shrinking mortgage origination market. As mortgage rates began to rise this year, lenders, mortgage technology companies and real estate brokers began laying off employees, often citing rapidly declining market conditions.
With mortgage rates rising, company officials said Knox has seen growing interest in second-tier products such as home equity loans or HELOCs from borrowers who have workable capital but are unwilling to not refinance.
“As mortgage rates have risen, more inventory will be available at more competitive prices,” said Matt Marra, chief growth officer at Knox.
Knox Financial raised $10m in Series A funding in April 2021, led by G20 Ventures, following a $3m seed round in January 2020. Largest markets for Knox are metropolitan areas of Boston, Atlanta, Houston, Dallas and Austin, Texas. According to Marra, Knox oversees a portfolio of $150 million in combined value.