American Advisors Group (AAG) is the largest reverse mortgage lender in the United States (as of 2016). Founded in Irvine, Calif. in 2004, it is licensed to do business in 48 states and has been approved by the Dept. of Housing and Urban Development (HUD) to do business in 81 separate geographical areas.
AAG became well-known through its television and print advertising, which for many years featured the late Sen. Fred Thompson of Tennessee. Following Thompson's death, the company hired actor Tom Selleck to become its new national spokesman, starting in June 2016.
The company is a member of the National Reverse Mortgage Lenders Association and is fully accredited by the Better Business Bureau. American Advisors Group is accredited by the Consumer Affairs rating service, which gives the company a 4.5 star customer satisfaction rating (2016) based on AAG Reverse Mortgage reviews by participating consumers. The company claims a 96 percent customer satisfaction rate based on its own surveys.
In addition to marketing AAG reverse mortgages itself, American Advisors Group also has a wholesale division that offers reverse mortgage products through other lending institutions and mortgage professionals, and provides related training and assistance services.
AAG Reverse Mortgages
The main product offered by AAG is an FHA Home Equity Conversion Mortgage (HECM), a type of government-backed reverse mortgage loan. This is the most common type of reverse mortgage used in this country. These have a maximum loan limit of $625,000, regardless of the value of the property itself.
AAG recently began to offer another product, a jumbo reverse mortgage, called AAG Advantage, for borrowers with high-value homes who wish to borrow more than the limit allowed on FHA reverse mortgages. Eligible homeowners may borrow up to $6 million with the AAG jumbo reverse mortgage. However, this product is not federally insured, as the FHA loans are.
Borrowers who obtain an AAG reverse mortgage have several options available to them:
Lump sum: The borrower obtains a single sum of money when the loan is closed and a fixed-interest rate is then charged for the duration of the loan.
Term: The borrower signs up to receive a monthly payment of a certain amount over a specific number of years. These loan have an adjustable rate based on the one-month LIBOR index.
Tenure: This also offers a set monthly payout, but one that continues for the life of the loan. This is also an adjustable rate
Line of credit: The borrower is given a certain credit limit they can draw against as they choose, over the duration of the loan. Adjustable rate.
HECM for purchase: This allows a borrower to use a reverse mortgage to purchase a new home without making mortgage payments. The borrower makes a substantial down payment, using funds from the sale of their previous home or other assets. A reverse mortgage is then set up that draws against the resulting equity in lieu of making regular mortgage payments.
HECM Annual Cap 5: An annual adjustable-rate reverse mortgage with a 5 percent lifetime interest cap.
How do reverse mortgages work?
A reverse mortgage is a special type of home equity loan available to borrowers age 62 and above. It allows them to borrow against their home equity but never have to make loan payments as long as they remain in the home.
Instead, all payments are deferred until the borrowers eventually vacate the home, either by moving out or due to their demise. The home is then usually sold to pay off the loan principle, fees and all accumulated interest. Any amount from the sale exceeding those obligations goes to the borrower or their estate.
FHA reverse mortgages, the most common type, are non-recourse loans, meaning the borrower's indebtedness can never exceed the value of the home when it is vacated. So regardless of how much accumulates in interest charges or how much a borrower draws with a tenure loan, they never owe more than what the home is worth.
For more information, see our Reader-friendly Reverse Mortgage Guide.
AAG contact information:
American Advisors Group Inc.
3800 Chapman Ave,
Orange, CA 92868
AAG reverse mortgage reviews: https://www.consumeraffairs.com/finance/american_advisor.html