A majority of Americans say they are concerned about the coronavirus pandemic’s effect on their retirement.
Roughly 80% of seniors believe their retirement lifestyle will be impacted because of the ongoing pandemic, according to a survey by American Advisors Group (AAG), with nearly a quarter expressing interest in a reverse mortgage if it can help their retirement portfolio recover. The findings are part of a larger effort by AAG to gauge how consumers, including veterans, are reacting to the volatile market.
AAG’s suite of products recently expanded to include the VA loan, noting a large portion of today’s veteran population is 55 and older — approximately 13 million U.S. veterans.
“Adding the VA loan was a natural expansion for AAG. There are millions of older veterans in this country who represent a significantly underserved demographic,” said AAG Chief Executive Officer Reza Jahangiri. “By offering veterans more ways to extract their home equity, we are empowering them to chart their own course in retirement, whether that means moving to a more senior-friendly home, getting in-home care, or simply maintaining their independence and quality of life in retirement.”
The company is a leading provider in a range of home equity solutions, like Home Equity Conversion Mortgage (HECM) loans. Commonly referred to as reverse mortgages, HECM loans allow those 62 and over the ability to access their home equity and eliminate monthly mortgage payments, so long as you continue to pay your property taxes, homeowners insurance, and maintain the home. There are a variety of different ways that a borrower can receive their payout from a HECM, including in a lump sum or as a line of credit.
A HECM loan can also be used as a refinancing option on a current mortgage or to purchase a new home that better suits a borrower’s needs.
Shannon Robinson, AAG Vice President of Strategic Sales, has worked in the mortgage industry for 15 years. She says a HECM caters to older veterans.
“It’s a tool that is designed to provide seniors with financial options in their retirement years. It can be a solution if they own their homes outright or if they have a good amount of home equity available,” she said.
As so many unknowns surround the pandemic, Robinson adds one thing is clear: now is a prime time to consider home equity options with “interest rates so low and home values so high, it is a perfect time for older Americans to look into the suite of products that AAG provides.”
Recent months have impacted financial portfolios, leaving “many seniors wondering what they need to do and if they have enough money to live out their retirement years,” Robinson says. Among the solutions AAG offers to offset this challenge is a line of credit that can supplement income.
“It gives our clients freedom and flexibility to pull funds as needed, but what’s even more attractive about it is it has a growth rate option available. So, for the funds that our clients don’t use on the line of credit, the available line will actually grow at the rate determined when the loan closes,” she explained.
Former Air Force Senior Master Sgt. Eric Torres, AAG Strategic Sales Support Manager, served 11 years, with a majority of his time as an air traffic controller. He adds that a HECM allows borrowers to have some breathing room ahead of repayment.
“One of the primary things that people don’t focus on … in the circumstance, especially with COVID-19 is that, if they want to access funds through traditional loans, it means that they’re going to go out and get a conventional line of credit or something that’s going to obligate them to make a payment back,” Torres said. “Whereas, with the reverse mortgage, that payment option is delayed as long as they continue to pay their property taxes, homeowners insurance and maintain their home; which gives seniors the freedom and peace of mind that they can go and put themselves on a financial footing that’s stable and secure, at their time of choice.”
The first step in accessing a HECM is to go through reverse mortgage counseling, which provides borrowers with a clear understanding of the loan. A home then receives an appraisal. On average, the process can take roughly 45 days but varies by client, Torres said.
In addition to VA loans and HECM loans, AAG offers:
- Conventional loans: Conventional loans can be used to purchase or refinance single-family homes or 1-4 unit properties.
- Jumbo loans: Jumbo loans are used for amounts above the limit set by Fannie Mae and Freddie Mac. These are used like conventional loans but with higher value homes.
- FHA loans: FHA loan is a mortgage that is insured by the Federal Housing Administration and issued by an FHA-approved lender, such as AAG. An FHA loan can help borrowers with limited funds and income buy homes with only 3.5% down payment.
- AAG Advantage Loans: A jumbo reverse mortgage where no mortgage insurance or monthly payments are required, so long as the borrower continues to pay property taxes and homeowners insurance, and maintain the home. Many people useAAG Advantage loans to utilize their home equity for other investments, to purchase a second property or to maintain their retirement lifestyle.
The above offerings are designed to provide home equity solutions to those veterans with retirement in sight, whether they are still actively serving, have recently retired or have been retired for a while. In addition to serving veterans’ needs, AAG works directly with veterans, like Tom Selleck who serves as the company’s spokesperson.
“The men and women who served our country deserve to retire with dignity and respect,” said Tom Selleck, AAG spokesperson. “As a veteran of the U.S. Army National Guard, I’m proud to represent a company like AAG that’s committed to improving the quality of life of older veterans.”