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American Advisors Group Review
With AAG you’ll find one of the largest variety of options we’ve seen among reverse mortgage companies. The company has an abundance of educational tools designed to help you decide which type of loan would best fit your needs, including a reverse mortgage calculator that can give you an idea of how much money you may qualify for. AAG originates reverse mortgage loans in all but one state (Massachusetts), and their proprietary Advantage Jumbo Reverse mortgage is only available in 24 states.
Multiple options. The most common type of reverse mortgage is the Home Equity Conversion Mortgage (HECM) and is regulated by the Federal Housing Authority. AAG offers five different reverse mortgage options, including HECMs, for senior homeowners who may need to take advantage of the equity in their home to pay for unexpected medical costs, supplement retirement income, or simply make it easier to stay in their own home. Most of the other top reverse mortgage lenders will only offer two or three options.
Educational resources. If you’re unsure of what type of loan is best, or even if a reverse mortgage is the right option for you at this time, you can find easy to understand information on the AAG website to help you decide. You can also ask for an information kit to be sent to you at no cost. If you’re still not sure, you can always talk to one of AAG’s home equity specialists to help you through the process.
Reverse mortgage calculator. AAG’s reverse mortgage calculator is easy to use. Answer three simple questions about your estimated home value, your current mortgage if you have one, and your age, and you’ll get an estimate of how much money you may qualify for in a few seconds.
Jumbo HECMs are not available everywhere. If you own a high-value property, AAG only offers its Jumbo loan in 24 states (AZ, CA, CO, CT, DC, FL, GA, HI, ID, IL, LA, MI, NC, NJ, NV, OH, OR, PA, RI, SC, TX, UT, VA, WA).
Reverse mortgages aren’t for everyone. Reverse mortgages, in general, can be beneficial to older homeowners but also have drawbacks you need to be aware of.
- Age Alone is not a guarantee of acceptance. Because reverse mortgages are regulated by the federal government, there are strict requirements in place designed to safeguard the borrower. This can ultimately make it harder for some to qualify.
- You need to have enough equity in your home to qualify. If you already have a mortgage on your home, the money from a reverse mortgage would be used first to pay off that lien, with the remaining loan amount going to you. If you don’t have enough equity, you won’t qualify.
- Some properties won’t qualify. Second homes or vacation/rental properties won’t qualify for a reverse mortgage, nor will properties that are not federal housing administration (FHA) approved. Mobile homes and certain condominiums won’t qualify for a reverse mortgage either.
- A reverse mortgage can affect your estate. If you plan on leaving your home to your heirs as part of an inheritance estate, they will be responsible for paying the mortgage debt – which has been accumulating interest for however long you were living in your home. If they are unable to pay, they won’t be able to keep the house.
- Your home can be foreclosed on if requirements are not met. Finally, there is the perception that you cannot lose your home if you have a reverse mortgage under any circumstance, which is not true. There are certain property maintenance requirements, as well as insurance and tax obligations, that must be met. Failure to do so can result in foreclosure.
AAG Reverse Mortgage Key Facts
|QUALIFYING FOR A REVERSE MORTGAGE|
|You must be 62 years of age or older|
|You must own your home|
|The home must be your primary residence|
|FEATURES AND SAFEGUARDS|
|You must complete a reverse mortgage counseling session with an independent counseling agency before applying.|
|You must undergo a financial assessment to ensure you can meet the financial responsibilities required of the loan. You must be able to pay property taxes and homeowners insurance, as well as keep the home good repair.|
|Spouses younger than 62 can qualify as an eligible non-borrowing spouse and remain in the home if you pass away, as long as they meet all loan obligations|
AAG Company Information
AAG was founded in 2004 and was formally launched in 2005, concentrating on providing reverse mortgage products and servicing until 2012, when the company launched its wholesale division. By 2014, AAG had become the largest reverse mortgage loan originator in the country.
In 2015 the lender launched AAG Advantage, its proprietary jumbo loan reverse mortgage product for high-value homes. Today, the company is headquartered in Orange County, California, and has branches in six states (CA, HI, N.Y., GA, TX, and IL), and known nationwide for its commercials featuring Tom Selleck.
AAG Reverse Mortgage Loans
AAG offers different types of reverse mortgages to help you use the equity in your home to your best advantage. It also provides expert advice on how to determine not only what option will work best for you, but also if a reverse mortgage is the right choice to begin with. You can speak to a home equity expert or ask for a reverse mortgage information kit by filling out a request online.
If you decide a reverse mortgage is the way to go, AAG can help you determine which one of its loan options best suit your needs:
- Lump-sum payout: With this option, you can get up to 60% of the amount you qualify for in one payment. It allows you to access the maximum amount of cash upfront if you need to pay off large bills.
- Growing line credit: This can be used as a safety net in case you run up against unexpected expenses. Use only what you need when you need it, and your line of credit grows as the equity in your home grows.
- Advantage jumbo loan: This is a proprietary loan designed for owners of higher-priced homes. You can access up to $4 million in equity with a fixed-rate reverse mortgage that allows you to receive a lump-sum payment, eliminate monthly mortgage payments, and not pay mortgage insurance.
- Term or tenure: With a term reverse mortgage, you can choose to receive monthly payments for a specified period of time. With a tenure reverse mortgage, you’ll receive monthly payments for as long as you live in the home and meet the loan requirements.
- Reverse for purchase: This program allows you to take out a reverse mortgage to purchase a new home. You will need to make a down payment, but you won’t have to pay monthly mortgage payments.
While AAG’s primary offering is reverse mortgages, it may not be the best option for your retirement goals. The lender also offers traditional rate and term and cash-out refinance home equity loans, traditional mortgage and VA loans, financial products and planning, and retirement counseling. If downsizing turns out to be the best option, AAG’s Residential Services provides a network of realtors dedicated to working with seniors to either sell your home or find a new one.
AAG’s Resources for Seniors
Originally designed as a loan to help older homeowners take advantage of the equity they built up in their real estate, reverse mortgages got a bit of a bad reputation during the Great Recession as older homeowners fell prey to dubious marketing practices during the height of the stock market bust.
However, in recent years the government has stepped in and put safeguards in place to protect homeowners as well as eliminate some of the riskier loan types associated with reverse mortgages. But taking out a reverse mortgage is still a complicated process, so it’s important you understand exactly how they work, what advantages they can provide, and also the pitfalls you want to avoid.
AAG stands out for the variety of resources they have on offer for seniors seeking to secure their retirement. The lender provides plenty of information to help potential customers understand the whole reverse mortgage process. You can view and read a series of videos and articles on not only all aspects of reverse mortgages, but also on how you can use your home equity as part of your overall retirement planning. If you prefer an in-person consultation, AAG has a national field team that can explain the pros and cons of reverse mortgages when it’s convenient for you.
This year, in response to the limitations imposed on in-person meetings by the COVID-19 pandemic, AAG released a free digital resource that provides information on identifying the typical scams directed towards seniors, as well as new scams that have popped up related to the coronavirus. AAG’s loan officers are also trained in identifying the signs of financial elder abuse, a serious problem among the country’s aging population.
Fees Associated with Reverse Mortgages
Just like any loan you apply for, a reverse mortgage has a set of fees, most of which are included as part of the loan. AAG will evaluate each person’s individual information and circumstance, including how much money is being applied for, to determine fees and interest rate. But, in general, the following are some of the largest fees that apply to all HECM reverse mortgages:
Mortgage Insurance Premium: There are actually two insurance premiums that need to be paid, and are set by the Federal Housing Authority. There is an up-front mortgage insurance premium of 2% charged at the time of closing, and an annual MIP of 0.5% of the loan balance.
These premiums are designed as a safeguard for both you and the lender. If you owe more on the reverse mortgage than what your property is worth, when it comes time for repayment the insurance will make up the difference between what you owe and the value of your property. You will never have to pay more than your loan balance or the department of housing and urban development (HUD) – appraised value of your home.
If you choose to receive monthly payments from your reverse mortgage, and your lender goes out of business, the insurance premiums ensure you will continue to receive your payments for the term specified in the loan agreement.
Proprietary reverse mortgages (such as AAG’s Advantage Jumbo loan) are not required to pay a MIP.
Origination fees: The FHA uses a formula to calculate how much a reverse mortgage lender can charge on HECM loans. Lenders can charge 2% on the first $200,000 of the property’s value and 1% on the amount over $200,000.There is a cap of $6,000 on origination fees. If a home has a value of $125,000 or less, the maximum origination fee that can be charged is $2,500.
Title fees: These can vary, and will usually include the costs such as title insurance, recording costs, searches, document preparation and delivery, among others.
Appraisal fees: These can vary as well. Reverse mortgage appraisals are conducted by an FHA-approved appraiser and follow specific FHA guidelines.
Other closing costs: These could include things like counseling fees, flood certifications, wire transfers fees, etc.
Make sure you understand all the fees that you’ll be paying before taking out a reverse mortgage. These fees will usually be taken out of the loan itself, and will impact the amount of money you receive. Also, keep in mind that if you have an existing mortgage on your home and you take out a reverse mortgage, your original mortgage will be paid off from the loan proceeds and you’ll receive the remnant in either a lump sum, line of credit, or monthly payments, whichever option you choose.
Understanding the total costs involved will help you determine if a reverse mortgage makes financial sense.
AAG Reverse Mortgage FAQs
What happens to my reverse mortgage if I decide to sell my home?
Once you sell your home, your reverse mortgage loan becomes due. You can pay off the loan with the proceeds from the sale of your home. If you owe more than the value of your home, and you have an FHA secured reverse mortgage, the difference will be paid by insurance on the loan.
Why do I need to receive financial counseling before applying for a reverse mortgage?
Reverse mortgages can be complicated and, while they present a number of advantages for senior homeowners, there are also disadvantages. Counseling about reverse mortgages from an independent source ensures you are fully aware of both, allowing you to make an informed choice about whether a reverse mortgage is the best option for your financial situation.
If I pass away, will my heirs have to repay the reverse mortgage immediately?
No. Your lender will present your heirs with options for paying off the debt. Your heirs will then have 30 days to decide which option to choose. The most common options include: surrendering the deed to the lender; paying off the mortgage and keeping the home; selling the home and paying off the mortgage with the proceeds; or converting the reverse mortgage into a conventional mortgage. If your heirs decide to pay off the mortgage, they will have 6 months to do so. After 6 months, if the reverse mortgage has not been repaid, the lender could begin foreclosure proceedings.
Can I move out of my home and rent it out if I have a reverse mortgage?
No. One of the requirements of qualifying for a reverse mortgage is that the home must be your primary residence.
Are there any restrictions on how I can use my reverse mortgage funds?
No. You can use the funds to pay off debts, supplement your social security and retirement income, make needed home repairs, or to cover any other need you may have.
AAG Reverse Mortgage – Key Takeaways
- Multiple reverse mortgage disbursement options
- Complete explanation of the advantages and disadvantages of reverse mortgages in written (free info kit) and verbal (reverse mortgage loan specialists) form
- Member of the National Reverse Mortgage Lenders Association (NRMLA), great customer reviews
- Provides conventional loan refinancing options as well as reverse mortgages
- Multiple resources to provide financial and retirement planning to seniors
- Multiple resources to help seniors identify scams