KNB Capital Inc. - 30721 Russell Ranch Rd Suite 140, Westlake Village, CA 91362 - Home Loans

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Reverse Mortgage

A reverse mortgage is a loan for seniors age 62 and older. HECM reverse mortgage loans are insured by the Federal Housing Administration (FHA) and allow homeowners to convert their home equity into cash with no monthly mortgage payments.

However, borrowers are required to continue paying property taxes and insurance and maintain the home according to FHA guidelines. Typically the loan does not become due as long as you live in the home as your primary residence and continue to meet all the loan obligations.

Reverse mortgage loans are commonly used to pay for home renovations, medical and daily living expenses. Homeowners who have an existing mortgage often use the reverse mortgage loan to pay off their existing mortgage and eliminate monthly mortgage payments.

A reverse mortgage loan uses a home’s equity as collateral. The amount of money the borrower can receive is determined by the age of the youngest borrower, interest rates and the lesser of the home’s appraised value, sale price and the maximum lending limit.

The funds available to you may be restricted for the first 12 months after loan closing, due to HECM requirements. The loan does not generally have to be repaid until 6 months after the last surviving homeowner moves out of the property or passes away.

At that time, the estate typically sells the home to repay the balance of the reverse mortgage and the heirs receive any remaining equity. The estate is not personally liable for any additional mortgage debt if the home sells for less than the payoff amount of the reverse mortgage loan.

Reverse mortgage calculator
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Reverse Mortgage Eligibility

To be eligible for a new reverse mortgage loan, the FHA requires all borrowers on title to be 62 years or older. If there is an existing mortgage on the home, it may be paid off with the proceeds from the reverse mortgage loan.

Eligible Homes Types for Reverse Mortgages

Most single-family homes, two-to-four unit owner-occupied dwellings or townhouses and approved condominiums and manufactured homes are eligible for a reverse mortgage loan. The home must meet FHA minimum property standards.

Inheritance

When the reverse mortgage loan does become due, the borrower’s heirs/estate can choose to repay the reverse mortgage loan and keep the home or put the home up for sale in order to repay the loan. If the home sells for more than the balance of the reverse mortgage loan, the remaining home equity passes to the heirs.

If the home sells for less than the owed balance, the estate is not required to pay more than the value of the home at the time the loan is repaid.

A reverse mortgage loan is “non-recourse”, meaning that if you sell the home to repay the loan, you or your heirs will never owe more than the loan balance or the value of the property, whichever is less; and no assets other than the home must be used to repay the debt.

Distribution of Funds

Reverse mortgage loan proceed can be received in any combination of the following options:

• Line of credit – draw as needed up to the maximum eligible amount

• Lump sum – a lump sum of cash at closing

• Tenure – monthly payments for the life of the loan

• Term – monthly payments for a specific number of years

Borrowers may access the greater of 60 percent of the principal limit amount or all mandatory obligations, as defined by the HECM, requirements, plus an additional 10% during the first 12 months after loan closing. The combined total of mandatory obligations plus 10% cannot exceed the principal limit amount established at loan closing.

If you have questions, please contact us.

*HUD Disclaimer, per HUD Mortgagee Letter 2014-10, “This material is not from HUD or FHA and has not been approved by HUD or a government agency.”

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KNB Capital
KNB Capital
5.0
Based on 14 Reviews
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Suda S.
Suda S.
2022-11-07 21:37:43
Fantastic customer service and professionalism from start to finish with great results, Brandon and team are knowledgeable, resourceful, reliable, and so... read more
Mike L.
Mike L.
2021-12-14 14:50:35
I highly recommend KNB capital for all your mortgage needs. They went above and beyond for me on my personal loan and got me the best rate. Give Brandon a... read more
Mavis S.
Mavis S.
2021-01-12 16:12:44
**** VA SAVY !!! **** Our first time to work with Brandon was on a refinance of our home (IRRRL). He made the process very smooth and found us a great rate... read more
Lucy V.
Lucy V.
2020-12-03 20:44:30
Loved that they showed up with mask on as safety is priority right now. We've been working with Brandon for years and he always treats us like family. He... read more
Krishn P.
Krishn P.
2020-10-08 17:07:43
Brandon Feco did an AMAZING job with helping me with a lengthy process of a refinance which was made even more complicated due to administrative issues. He... read more
Brad C.
Brad C.
2019-08-22 12:53:27
Brandon is truly amazing person and very very good at his job. He will totally take care of you. read more
Sarah H.
Sarah H.
2019-07-19 18:30:12
Brandon Feco and KNB Capital provided excellent service to us with our mortgage refinancing, for which we are very grateful! Brandon went above and beyond... read more
Sheri B.
Sheri B.
2019-05-29 19:22:53
KNB Capital goes above and beyond! My refinance went very well, even exceeding my expectations. Brandon Feco is knowledgable, professional and genuine. I... read more
Jim K.
Jim K.
2015-10-29 16:26:11
When we started our house hunting adventure with my real estate agents Joseph & Jennifer of So Cal Properties, they couldn't stress enough the importance of... read more

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30721 Russell Ranch Rd Suite 140, Westlake Village, CA 91362

info@knbcapital.com

805-527-6000

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