American Advisors Group has surveyed borrowers who have chosen its private-label AAG Advantage loan to determine what prompts seniors to pursue a jumbo reverse mortgage.
The results highlight the vast differences between the average reverse mortgage borrower – whose financial situation is often tenuous – and those who pursue a jumbo reverse to access the equity in a higher-value home.
AAG, which currently dominates the reverse mortgage space with 25% of market share, rebranded last year as a provider of home equity solutions and expanded beyond reverses into traditional mortgage products and real estate services.
In addition to the Federal Housing Administration’s HECM, the California-based lender offers borrowers access to up to $4 million in equity in one lump sum through its non-agency jumbo reverse mortgage.
While the loan is billed as the AAG Advantage and sold through the lender’s retail channel, it is actually the HomeSafe Standard loan offered by Finance of America Reverse. In March, the two lenders announced a partnership that would allow AAG to sell the HomeSafe under its own branding on a correspondent basis.
AAG said it has seen significant traction with the loan.
“Consumer response to the jumbo product has exceeded all of our expectations,” said an AAG spokesperson. “There seems to be a real market for reverse mortgages with affluent seniors, especially those seeking to liquidate some of their real estate wealth.”
The lender said the average borrower for its jumbo loan is 77 years old, has a credit score of 729 and owns a home valued at $1.7 million. It pinpointed the average loan amount at $665,000.
AAG explained it surveyed 250 Advantage borrowers to revealed the main reasons why seniors pursue a jumbo reverse, shedding light on how originators can better market the product. Here they are:
Top 10 reasons seniors chose a jumbo reverse mortgage:
- To make home modifications or repairs
- To buy an investment property or a vacation home
- To help children purchase a property
- To provide children with an early inheritance
- To create college funds for grandchildren
- To establish a trust fund
- To cover in-home care costs
- To have more financial liquidity
- To maintain their current lifestyle
- To pay off other debts
“Jumbo reverse mortgage loans present an opportunity for older Americans to achieve greater financial comfort and expand their wealth,” said Paul Fiore, chief retail sales and operations officer for AAG. “Products like Advantage have emerged as an optimal option for affluent homeowners who have a desire to diversify their capital and invest in other aspects of life.”