AAG Reverse Mortgage Complaints: What To Know

A reverse mortgage can strengthen your financial stability during your retirement years. Some homeowners use these loans to stay in their neighborhoods instead of having to downsize or move out. You can stay in your current home and have a smoother retirement, but with many reverse mortgage lenders, which one should you choose? American Advisors Group (AAG) is an established American reverse mortgage lender that closes more HECM loans than any other lender in the country. This article will explore AAG’s role in the reverse mortgage industry and cover some tips for homeowners considering a reverse mortgage.

About AAG and Their Reverse Mortgages

AAG is the nation’s leading reverse mortgage lender and has nearly 20 years of experience. The HECM loan provider has been around since 2004 and is an approved lender of the U.S. Department of Housing and Urban Development (HUD). The company is also a member of the National Reverse Mortgage Lenders Association (NRMLA), which is a trade organization for U.S. reverse mortgage lenders.

AAG specializes in solutions for homeowners seeking better retirements. Many retirees do not have enough income streams after retirement to support their lifestyles. A retirement account, Social Security, and savings help, but home equity provides something extra. Some homeowners can receive an additional $2,000 each month through a reverse mortgage program. That extra cash can make retirement easier, and AAG helps you access your home equity and enable the extra income.

Is AAG a Legitimate Company to Get a Reverse Mortgage From?

The reverse mortgage industry has great companies, but it’s also filled with scammers. Some people prey on the elderly by pretending to be reverse mortgage lenders. These scammers often create a false sense of urgency or deceive homeowners about a promising investment opportunity that requires a reverse mortgage. With good companies and bad actors abound, who can you trust?

Luckily, AAG is one of the most reputable reverse mortgage lenders in the industry. The company has over 5,000 Trustpilot reviews that average 4.6 stars. American Advisors Group also has an A- rating on the Better Business Bureau and 4.65 stars across over 750 reviews. Many borrowers have good things to say about AAG, and online reviews are one of the best ways to gauge a company’s trustworthiness. AAG has been around for almost 20 years, and a 2021 client satisfaction survey revealed that more than 9 out of 10 clients are satisfied with the lender’s services. 

AAG is a reliable choice, and while it’s a good idea to compare other lenders before making a decision, you don’t have to worry about AAG running off with your money. Their team will help you get set up with a reverse mortgage so you can receive monthly payouts from the decades of hard work you put into building home equity. 

Things to Consider Before Getting a Reverse Mortgage

A reverse mortgage is a supplemental income that can support your retirement lifestyle, especially if you combine it with Social Security and your retirement account. However, you shouldn’t rush into getting a reverse mortgage. There are a few key things to keep in mind before getting a HECM loan.

What Happens If You Sell the Home?

If you sell a home with an active reverse mortgage, you will have to pay off the reverse mortgage with the proceeds from the home sale. For instance, if you sell your home for $1 million and owe $300,000 on your reverse mortgage, you will walk away with $700,000. This is similar to selling a home with a HELOC on it. You will have to pay off that debt before obtaining the rest of the proceeds. 

A high reverse mortgage balance can make it more difficult to sell your home since you won’t get as much equity. Many homeowners with reverse mortgages aim to live in the same property for the rest of their lives.

Are There Any Restrictions on the Use of Funds?

You can use reverse mortgage funds for any purchase. Some people use these payouts to keep up with property taxes, federal taxes, and the cost of living. If you have enough cash left over, you can use some of the proceeds to plan your next vacation. It’s entirely up to you how you use the funds. You do not have to inform a reverse mortgage lender about how you intend to use the funds.

Can You Change Your Mind After Closing?

Every reverse mortgage loan includes a right of rescission. This 3-day period allows homeowners to close the loan without paying any penalties. After the rescission ends, you are committed to the reverse mortgage.

How Does It Affect Other Government Assistance?

A reverse mortgage will not impact Social Security and other non-means-tested government benefits. The money you make from reverse mortgages is not treated as income which protects many of your benefits and also means no income taxes on your home equity. However, a reverse mortgage program can impact Medicaid and other means-tested programs. Non-means-tested government benefits are available to everyone who qualifies, while means-tested benefits only go to people who have income and other proceeds below a certain benchmark.

Why Is There a Need for Financial Counseling

While reverse mortgages can make your retirement years smoother, they can create financial challenges in the future if you run out of home equity. This is because the monthly reverse mortgage payments depend on your home equity. Each month, your home equity decreases like a savings account, and it goes down quicker if you obtain a lump sum payment. Unfortunately, most homeowners with HECM loans aren’t replenishing their home equity. The entire point of a reverse mortgage is to receive monthly payments based on your built-up equity.

However, the equity in your home can dry up if you borrow against it long enough. A homeowner’s reverse mortgage may run out of home equity to draw from since equity only comes from mortgage payments and property appreciation. By the time home equity runs out, most homeowners are in their 70s or 80s. While it’s possible to get a new job or side hustle, it becomes more difficult as people get older. In addition, some retirees may develop physical limitations that give them fewer opportunities. The cost of living won’t decrease because reverse mortgages dry up, and those costs will likely rise over time due to inflation.

This stark scenario represents one of the risks of taking out a reverse mortgage product. It’s hard to recover if you run out of equity, and a financial counseling session can mitigate this risk. A counselor can guide you on how to use a reverse mortgage and ways to get more mileage out of your retirement proceeds. Many consumers are not aware of the risks of getting a reverse mortgage and ways to increase the likelihood of a smooth experience. Financial counseling gives you more insights to determine if a reverse mortgage is right for you and how to approach this financial product.

What Happens If One of the Owners Dies?

What happens next depends on the loan’s arrangement. If the surviving spouse is an eligible borrower, the surviving spouse can live in the home and continue receiving reverse mortgage payments. Eligible non-borrowing spouses can also live in the home, but they will not receive additional reverse mortgage payments. On the other hand, if the spouse is ineligible or the homeowner dies alone, the heir can buy the home, sell it, or give it to the lender for repayment. The heir has 30 days to make a decision and act on it.

Are the Heirs Liable for the Debt?

As you draw money from your home equity and interest accumulates, your debt will grow. It’s natural to wonder how this rising balance will impact your heirs, but there isn’t much to worry about. Heirs do not have to repay the debt from your reverse mortgage. So, for example, if your home value is $500,000, and your reverse mortgage balance is $510,000, your heirs do not have to make up the $10,000 difference. 

Heirs can either pay the entire loan to buy the home or sell the home and not cover any gap. However, the heir must sell the home at 95% of its appraised value to avoid paying the difference between the home value and the loan balance. The heir can also choose to turn the home over to the reverse mortgage lender to avoid paying the debt or the complications of selling the property.

Can You Move Out of Your Home?

Even if you get a reverse mortgage, you are not stuck at your current home. However, if you move out, you will have to pay off the reverse mortgage. Homeowners with enough means can establish a new primary residence and repay the reverse mortgage balance on their previous residence. Then, the homeowner can hold onto both properties. 

If the homeowner cannot afford both homes, the homeowner will have to sell their old property and cover the reverse mortgage balance to move into a new home. You can then decide to take out a reverse mortgage on your new primary residence.

How to Inquire About a Reverse Mortgage with AAG

Want to know how much you can get from a reverse mortgage? AAG makes the process simple. You will get directed to a page that invites you to fill in your zip code. After providing your zip code, AAG will ask for your home address, name, mortgage balance, your age, property value, and your phone number.

After filling out those basic details, AAG lets you know how much you can qualify for. You can either wait for a representative to follow up or skip the line and call their number. Homeowners can also enter their email addresses to receive information on how to have a smoother retirement. The web page has two free guides waiting for you.

When you speak with a representative, homeowners can ask questions and learn about their choices. American Advisors Group has helped thousands of people navigate retirement and use home equity to keep up with living expenses. You can fill out their form and wait for a representative to give you a call.