As we grow old, we all come to realize that our golden years are different from what we imagined them to be. After a lifetime of work and paying off mortgages, there’s always a nagging worry about how to make ends meet in retirement. With rising medical expenses and living costs in general, many seniors find themselves financially strapped at an age when they should be enjoying a stress-free life.
Fortunately, reverse mortgages can offer seniors a financial lifeline by allowing them tap into their home equity. A reverse mortgage is an arrangement where homeowners aged 62 years or older can receive cash payments or an ongoing stream of income by borrowing against their home equity.
One of the best-known providers of such loans is American Advisors Group (AAG), which has been serving as the top provider of reverse mortgages since 2004. Here’s an overview of what you need to know about AAG reverse mortgages:
What Is American Advisors Group?
American Advisors Group (AAG) is a leading lender in the United States that specializes in offering FHA-insured home equity conversion mortgages (HECMs). The company focuses on serving senior citizens aged 62 years and above who desire to access some portion of their home equity without selling their homes.
AAG aims to help retirees live more comfortably, reduce financial stress, and enjoy retirement with confidence by providing several lending options suitable for homeowners’ individual needs.
What Are Reverse Mortgages?
Reverse mortgages allow retirees to tap into their home equity without selling their homes. This type of loan gives homeowners access to cash payments or regular streams of income based on the value of their homes, similar to how traditional mortgages work.
However, unlike traditional loans that require monthly repayments, reverse mortgage borrowers are not required to pay back the loan until they vacate or sell the property. In essence, these loans can provide homeowners with a steady source of income while still living in their homes.
What Types of Reverse Mortgages Does AAG Offer?
As the leading provider of reverse mortgages, AAG offers different types of mortgages for seniors to choose from. Below are some examples:
FHA-Insured HECM Loans
AAG provides federally insured home equity conversion mortgage (HECM) loans through the Federal Housing Administration (FHA) that enable homeowners aged 62 years or older to access tax-free funds based on their home equity’s value.
An FHA-insured HECM loan has several benefits, including no credit score requirements and low closing costs. Additionally, these loans require no monthly repayment as long as the borrower remains living in the property.
Jumbo Reverse Mortgages
AAG’s proprietary lending program also offers jumbo reverse mortgages for those with high-value homes ($1 million or more). These loans provide borrowers with larger loan amounts than what is available with a standard HECM loan and have similar back-end fees.
Jumbo loans offer flexible payment options that allow borrowers to receive cash payment, line-of-credit access or fixed-term payments. This type of loan can be an excellent option for seniors who need a considerable amount of cash upfront or want more control over how they receive their funds.
Traditional Home Equity Loans
AAG also provides traditional home equity loans that enable homeowners to borrow against their property’s value without having to sell it. These types of loans require monthly payments, which differ depending on several factors such as interest rates and principal payments.
Traditional Home Equity Loans can be ideal for retirees who are comfortable with making monthly repayments after deciding how much money they need upfront.
How Do American Advisors Group Reverse Mortgages Work?
Reverse mortgages work differently from traditional mortgages since the homeowner does not pay anything upfront. Instead, lenders advance cash payments based on the home’s value without requiring repayment until the homeowner vacates the property. Reverse mortgages can be ideal for seniors with little to no savings who need cash to pay off mortgages, medical bills or supplement their income.
Once the homeowner decides they would like to access their home equity, AAG requires a counseling session with an approved Housing and Urban Development (HUD) counselor to ensure they understand the mortgage’s terms and conditions. After that, AAG will provide them with loan options that best match their needs.
The amount of money you receive from a reverse mortgage depends on several factors such as your age, your home value and location. Other financial factors may determine how much you can receive in additional payments.
How Can You Qualify for an American Advisors Group Reverse Mortgage?
To qualify for an AAG reverse mortgage, you must be at least 62 years old and own a property as your primary residence. You also need to have enough equity in your home to qualify for the loan.
Credit scores do not impact eligibility since reverse mortgages require no monthly repayments until due dates or until the owner ceases residency in the property. However, you must undergo a credit check during application processes.
Pros and Cons of American Advisors Group Reverse Mortgages
While reverse mortgages can offer retirees multiple benefits, they too come with some disadvantages. Below are some pros and cons associated with AAG reverse mortgages:
- No monthly repayments due until due dates or when living arrangements change
- Provides homeowners with additional sources of income
- Offers tax-free payouts that don’t affect social security benefits
- HUD counseling ensures borrowers fully understand loan terms
- Flexible payment options available
- High fees associated with closing costs and interest rates
- Reduces heirs’ inheritance
- Limits remaining equity in the event of selling a home while still owing on loans
All in all, while American Advisors Group Reverse Mortgages can create considerable wealth for seniors and help them maintain independence while keeping possession of their homes, they require serious contemplation and consultation with HUD-approved counselors before making any decisions. One of these counselors can help uncover more information about what a reverse mortgage entails in your situation, objectivities, and finances.
What is American Advisors Group Reverse Mortgage?
American Advisors Group Reverse Mortgage is a type of home equity loan that allows seniors to convert the equity in their homes into cash.
Who can qualify for an American Advisors Group Reverse Mortgage?
Seniors who are 62 or older, own their home outright or have a low mortgage balance, and live in the home as their primary residence can qualify for an American Advisors Group Reverse Mortgage.
How much money can I get from an American Advisors Group Reverse Mortgage?
The amount of money you can receive from an American Advisors Group Reverse Mortgage depends on several factors, including your age, the value of your home, and current interest rates. However, typically seniors may access up to 60% of their eligible loan proceeds upfront or over time.
What are the benefits of getting an American Advisors Group Reverse Mortgage?
Some of the benefits of getting an American Advisors Group Reverse Mortgage include having access to cash without having to sell your home, being able to use the funds for any purpose, and not having to make monthly mortgage payments.
Can I lose my house if I take out an American Advisors Group Reverse Mortgage?
No. When you take out an American Advisors Group Reverse Mortgage, you do not give up ownership of your home. You still own it and remain responsible for paying property taxes and homeowners insurance costs. Your heirs will have options following your passing as outlined in the loan agreement terms & conditions.
When do I need to pay back my American Advisors Group Reverse Mortgage?
The loan is due when the borrower dies or moves out of his or her primary residence permanently; he/she also has six months after leaving before final repayment starts.
Can I refinance my existing mortgage with an American Advisors Group Reverse Mortgage?
Yes, you can use an American Advisors Group Reverse Mortgage to pay off your existing mortgage and have access to additional cash. As long as the reverse mortgage amount is greater than the current balance owed on the existing mortgage.
What fees are associated with an American Advisors Group Reverse Mortgage?
Some of the fees associated with an American Advisors Group Reverse Mortgage include appraisal fees, closing costs, and loan origination fees. These will vary depending on the complexity of the loan and other factors specific to each individual’s circumstances.
How does an American Advisors Group Reverse Mortgage affect my taxes?
The proceeds from a reverse mortgage are considered loan advances and not taxable income. However, interest on the loan may be tax-deductible for some seniors.
Is it safe to get an American Advisors Group Reverse Mortgage?
Yes, getting an American Advisors Group Reverse Mortgage is safe as long as you work with a reputable lender. Be sure to do your research and choose a lender that is licensed by your state and has a good reputation in the industry.