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How To Finance Aging-In-Place Renovations

In a recent Bankrate survey, 69 percent of homeowners said that — if given the choice — they would still buy their current home and go through the whole process all over again. That sentiment only grows with age. What are the benefits of aging in place and what are the best options for retirees to finance aging-in-place renovations so they may stay in their home? Those are the burning questions many don't have the answers to.

Staying in your own home as you grow older offers many benefits. For most, it means a stronger sense of safety, comfort and independence, and it also affords you more privacy. It can also be cheaper than the costs of an assisted living facility. To be able to age in place, you may need to make physical changes to your home and it’s best to begin planning these renovations BEFORE they are an absolute necessity.

Financing Aging-In-Place Renovations

There are a few changes that we can incorporate into our homes to improve our quality of life as we age. Some can be as simple as installing sensor lighting around the house or replacing doorknobs with lever handles, but others require the help of an experienced professional. For example, replacing your current countertop for a higher one, making door entryways smooth, or adding no-step shower or walk-in tub. The complexity of accomplishing these tasks without turning your home completely upside down will inherently make them more expensive.

A recent Bankrate survey found that about a quarter of homeowners (25 percent), have delayed some much-needed home renovations due to the current state of the economy.

Most people reach their peak earning years in their mid-40s through their mid-50s. If you’re in that sweet spot, your credit score may be the highest it’s ever been, and you also may have the most equity in your home. If that’s the case and you need help financing aging-in-place renovations, then your two best options are home improvement loans and home equity loans.

Home improvement loans

Home improvement loans are personal loans taken out specifically for funding home renovations. These loans are unsecured and rely entirely on your credit score and credit history. You won’t have to tap into your home’s equity, nor put your home at risk. But since home improvement loans are unsecured, interest rates are generally higher than those of home equity products.

Home equity loans and HELOCs

Home equity loans and HELOCs, on the other hand, turn your home’s available equity into cash, which you can then use toward renovations or whatever other expenses you’re dealing with. Since these loans are secured by your home, the interest rates should be lower than those of home improvement or personal loans.

Home improvement loans work best for short-term expenses and small amounts you know you can repay quickly because repayment periods are usually anywhere from one to 10 years.

Retired and on a fixed income? If you’re like many retirees, Social Security might be your only source of steady income. Though this could make it difficult to fund your necessary accessibility improvements, finding funding is not impossible.

Your best option may be to utilize the equity you’ve built up in your property or consider a reverse mortgage, also called a home equity conversion mortgage. A reverse mortgage is a type of loan that gives you money from your home equity in either a lump sum or regular monthly payments.

If you choose to tap into your home’s equity, make sure that you plan to remain in your home for at least another decade. Home equity loans and HELOCs have an average lifespan of 15 to 30 years, and a reverse mortgage will come due when the borrower either passes away, sells the home or permanently moves out.

You may also consider an FHA-backed improvement loan, like a Title 1 Property Improvement Loans or a 203(k) loan. Because each loan is insured by the federal government, you’ll likely get a lower rate than you would on other improvement loans or personal loans.

Another option is to apply for a government or state grant. Some agencies, such as the U.S. Department of Housing and Urban Development, offer grants specifically for seniors to cover some of the costs associated with aging-in-place renovations.

To be eligible for these, you’ll need to meet certain income and age requirements. This makes them a bit more restrictive than other sources of financing. That said, it’s still worth a shot, as this is money that doesn’t have to be repaid.

The most important thing to keep in mind is that if you want to stay at home, you need to start planning early before a small issue becomes a crisis. Rick Byers and Longevity Home Solutions can help. Rick took decades of experience in construction and his own experiences with his family's own changing needs and became a certified Aging In Place Specialist so he can provide his clients with solutions that will allow them to stay in their homes. Contact us today!  

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