AAG Reverse Mortgage: Helping Seniors Live a Better Retirement Life

Infographic of an elderly couple sitting on their couch at home

With so many different types of home loans these days, it can be hard to keep them all straight. Today we will keep it simple and are talking specifically about reverse mortgage loans.

Reverse mortgages are designed specifically for borrowers at least 62 years old, making them the perfect option for retirees who need funds to travel, make home upgrades, pay medical bills or cover other expenses. American Advisors Group offers this type of mortgage in 49 states and the District of Columbia, giving seniors convenient access to loan funds. Learn more about the AAG reverse mortgage review and determine if it’s right for you.

What Is a Reverse Mortgage?

A reverse mortgage is a type of mortgage that allows you to borrow against the equity in your home. Equity refers to the difference between your home’s value and the balance on your mortgage. For example, if your home is worth $400,000 and you have a mortgage balance of $100,000, then you have $300,000 in equity. Reverse mortgages differ from traditional mortgages because you don’t need to worry about making monthly payments as long as you remain in your home.

You must be over 62 and have a significant amount of home equity in order to qualify for a reverse mortgage. You must also have the financial means to continue paying property taxes and homeowners insurance. Finally, your home must be in good condition. If it isn’t, the lender may require you to make repairs before approving your application.

What Is American Advisors Group?

American Advisors Group, better known as AAG, is a reverse mortgage lender that aims to help older Americans get more enjoyment out of retirement. The company operates according to the following values:

  • Caring: AAG employees are committed to helping seniors retire comfortably. They go the extra mile to help customers find the right borrowing options.
  • Ethical: AAG requires its employees to act ethically at all times.
  • Driven: Employees strive to educate consumers about their borrowing options and ensure seniors have the information they need to make informed decisions.

AAG belongs to the National Reverse Mortgage Lenders Association, indicating that the company maintains high standards. It also has an average rating of 4.6 on Trustpilot and a 4.66 on the Better Business Bureau (BBB), with many customer reviews commenting on the patience and kindness of AAG employees.

Reza Jahangiri founded AAG in 2004, increasing access to reverse mortgages. The company has offices in California, Texas, New York and Georgia, but it offers the AAG reverse mortgage in 49 of 50 states. If you live in Massachusetts, you’ll have to find a different mortgage company.

AAG Settlement

You should know that AAG entered into a settlement agreement with the Consumer Financial Protection Bureau over claims that it misrepresented some home values. As part of the settlement, AAG has to pay a civil penalty and compensate some of its customers. Settling with the CFPB doesn’t mean that AAG violated any laws or that its executives have admitted to any wrongdoing.

How Does an AAG Reverse Mortgage Work?

Infographic of a older couple watering their garden at their house

AAG’s reverse mortgages work just like the reverse mortgages offered by other companies. If you’re eligible, an appraiser will come to your home to assess its value. This helps determine your net principal limit or the sum of the following:

  • Total equity in your home
  • Your age
  • The interest rate on the loan
  • The type of reverse mortgage you choose

Once the loan application is approved, AAG pays off your current mortgage. This eliminates your monthly mortgage payments, making it easier to cover your expenses. Finally, AAG gives you a lump sum or sends you monthly payments over time. You can use the extra money for almost anything, such as traveling or diving into any new hobbies.

With an AAG reverse mortgage, you don’t have to make any payments as long as you live in your home and continue to pay homeowners insurance premiums and property taxes. If you move somewhere else, you must repay the loan. Otherwise, your heirs will repay the loan when you pass away.

Pros and Cons of a Reverse Mortgage

Getting an AAG reverse mortgage has many potential benefits:

  • Ability to use home equity in your favor: Usually, the only way to use your home equity is to sell your home and use the proceeds to cover your expenses. A reverse mortgage can allow access your equity while you’re still living in your home.
  • Tax benefits: Because a reverse mortgage qualifies as a loan, you don’t have to pay any tax on the payments you receive.
  • No monthly payments: If you took out a second mortgage, home equity line of credit or home equity loan, you’d have to make monthly payments. However, with a reversed mortgage, you don’t have to make payments.
  • Easy approval process: With a traditional mortgage, you must meet the lender’s income and credit score requirements. Reverse mortgages don’t have these requirements, making it easier to get approved.

Although an AAG reverse mortgage has many pros, it also has some disadvantages:

  • High costs: It typically costs more to take out a reverse mortgage than it does to get a traditional mortgage.
  • Variable interest rates: Many reverse mortgages come with variable interest rates, increasing the total cost of borrowing.
  • Increasing balance: When you make traditional mortgage payments, your balance goes down over time. With a reverse mortgage, your balance increases.
  • Benefits eligibility: Reverse mortgages affect your income and assets so that they may change your eligibility for need-based programs like Medicaid and Supplemental Security Income (SSI).
  • Continued expenses: A reverse mortgage doesn’t eliminate your property taxes or homeowners insurance premiums.
  • Tax consequences: If you have a reverse mortgage, you can only take the home interest deduction on your tax return once the loan is repaid.

FAQs

Here are a few commonly asked questions about AAG reverse mortgage loans.

  1. How can I use the money from an AAG Reverse Mortgage?
    There are no restrictions on using the reverse motgage loan amount proceeds from a reverse mortgage. You can use the money for anything, from living expenses to home improvements, paying off debts, or traveling the world.
  2. Will I still own my home if I take out an AAG Reverse Mortgage?
    Yes, with an AAG Reverse Mortgage, you retain the title and ownership of your home. The loan repayment is not due until the last surviving borrower or eligible non-borrowing spouse sells the house, moves out, or passes away.
  3. What types of homes are eligible for an AAG Reverse Mortgage?
    Most traditional homes that are used as primary residences are eligible. This includes single-family homes and 2-4 unit homes with one unit occupied by the borrower. HUD-approved condominiums and manufactured homes meeting FHA requirements are also eligible.
  4. What happens if I pass away or move out of my home?
    The loan balance becomes due if you pass away or move out of your home. 
  5. What costs are associated with an AAG Reverse Mortgage?
    Costs can include origination fees, closing costs, mortgage insurance premiums, servicing fees, and interest. These costs may be financed as part of the reverse mortgage options.
  6. What are the risks associated with an AAG Reverse Mortgage?
    As with any financial decision, there are risks involved. Borrowers are still responsible for paying the property taxes, homeowner’s insurance, and any necessary home repairs. If these obligations are not met, the loan could become due and payable, so it is important to do your research before deciding on a company.
  7. Can you get out of reverse mortgage?
    Yes, reverse mortgages can be paid off at any time. You or your heirs can pay the loan off by selling the home or by using other assets to repay the loan.

Please consult a financial advisor or a mortgage professional to understand whether a reverse mortgage suits your needs. The information provided here is based on general knowledge and may not apply to specific situations.

If you’re concerned about the effects of a reverse mortgage on your finances, discuss them with a financial advisor before you apply.

You might also be interested in: Mortgage Refinance- 5 Great Benefits Of Refinancing

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