How to finance aging in place renovations
In a 2018 study, AARP found that 76 percent of people 50 and older would prefer to stay in their homes as they age. This is a process known as aging in place – a process in which older people renovate their properties to accommodate aging, rather than moving to an assisted living facility, nursing home, or with a to be expensive.
There are many benefits to staying at home as you age. For the most part, that means a stronger sense of security, comfort, and independence, and it also gives you more privacy. While renovation costs can be high, aging in place can often be cheaper than an assisted living facility would be, especially if you plan ahead.
For a room-by-room guide to aging in-place renovations, see The AARP HomeFit Guide.
For the budget-conscious homeowner, there are a number of ways to fund the aging-in-place process, including:
It is best to start planning on-site renovations early, well before you retire. If you haven’t started planning yet, there are still financial steps you can take to stay in your home. This guide breaks them all down.
What is your current situation? Choose an option below.
I still have a job and haven’t retired yet.
I am retired and on a fixed income.
I’m moving in with a family member.
I’m still employed and haven’t retired yet
Best for you: Home improvement loan or Home equity loan / HELOC
If you are still employed but are planning to age in place, now is the time to start planning. If you’re a homeowner, you’ll want to start making home ownership more accessible as soon as possible. Ideally, you can stagger your renovations over time to reduce costs and hassle, but depending on your age and retirement schedule, you may need to do multiple renovations at once to make sure your property is ready.
A quick caveat here: Remodeling your home for the elderly doesn’t necessarily mean cold, clinical design. In fact, it’s usually better to incorporate aging in place into other home improvement projects than to do it on an ad hoc basis. This way you can have the interior design you want while improving the accessibility of your home (this also helps to ensure the value and market value of your home when you are ready to sell it).
For example, if you’re redoing your kitchen cabinetry, you might consider replacing knobs with D-shaped handles to make it easier to grip with age. Small steps like this can help you prepare for larger aging in-place renovations in the future.
Fund these renovations
Most people reach their years of maximum earnings in their forties. If you are in that great place, your credit score may be the highest it has ever been, and you may also have the most equity in your home. If so, your two best financing options for aging in-place renovations are home improvement loans and home equity loans.
Home improvement loans are personal loans taken out specifically to finance home renovations. These loans are unsecured and depend entirely on your credit score and your credit history. You won’t have to dip into your home equity or put your home in jeopardy. But since home improvement loans are unsecured, interest rates are generally higher than those for home equity products.
Home equity loans and HELOCs, on the other hand, turn the available equity in your home into cash, which you can then use for renovations or any other expense you need to make. Since these loans are secured by your home, the interest rates should be lower than those for home improvement or personal loans.
Home improvement loans work best for short-term expenses and small amounts that you know you can pay off quickly, as repayment periods are typically between one and 10 years. Home equity loans and HELOCs typically have repayment periods ranging from 15 to 30 years. If you are not sure whether you will continue to live in your home after you retire, we recommend a home renovation loan.
I am retired and on a fixed income
Best for You: Home Equity Loan / HELOC, Government Assistance, Reverse Mortgage
If you are currently retired, you may already need accessibility renovations, like a non-slip floor (especially in the bathroom), grab bars around the toilet, a handrail or a more door. wide for your walker or a tub or low shower. with a step-free entry. But how do you finance these renovations?
If you’re like many retirees, Social Security might be your only source of stable income. While this can make it difficult to fund your needed accessibility improvements, it is not impossible to find funding.
Your best option may be to use the equity you have accumulated in your property or to consider a reverse mortgage, also known as a home equity conversion mortgage. A reverse mortgage is a type of loan that gives you money from the equity in your home in the form of a lump sum or regular monthly payments.
If you choose to tap into the equity in your home, make sure you plan to stay 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 mature when the borrower dies, sells the house, or moves out permanently.
You may also want to consider an FHA-backed improvement loan, such as a Title 1 Loans for Home Improvement or one 203 (k) ready. Because every loan is insured by the federal government, you will likely get a lower rate than other home improvement loans or personal loans.
I’m moving in with a family member
The best for you: Proceeds from the sale of your home, personal loan, low interest credit card
Ideal for your loved one: Home equity loan / HELOC
Moving in with a family member or loved one can mean you have fewer options for personalizing your living space. It might not be the most ideal option for aging in place, but it does give you the chance to live with your loved ones and have a home within a home. To get started, talk to your loved one about potential renovations to make the property safer and more accessible.
The most significant changes will be to the room or suite you will be staying in. These can include things like:
- Install motion activated lights or illuminated switches.
- Change the door handles for the levers.
- Replacing tile with carpet or other non-slip flooring options.
- Widening of doors for walkers and wheelchairs.
- Remove blinds and hang light window coverings to maximize natural light.
- Installation of handrails on or near the bed.
If they’re open to these little updates, you might also want to speak with your loved one about renovating the common areas. Open shelving in the kitchen, grab bars in bathrooms, and a front porch railing can all be small but effective adjustments to help you age safely in your new home. Lowering sinks and counters is also a good idea if possible.
Naturally, you’ll want to help your loved one pay for these renovations or cover them in full. If you sell your home before moving in, the proceeds from the sale can be used to cover any renovation costs you may encounter. If you are not selling a property, you may want to consider a personal loan or low interest credit card to cover the costs.
If you’re on the other end of the equation – and an aging loved one moves into your current home – then think carefully about the space they’ll be living in. If you don’t have a dedicated room they can stay in, you might consider adding a master bedroom or secondary suite on the property.
If you have a room available, make an effort to improve accessibility before your loved one moves in. The small changes above are a good place to start, as are the bathroom updates they’ll be using. These may include:
- Addition of a folding seat in the shower.
- Installation of hand-held shower heads.
- Added grab bars in the tub and around the toilet.
- Put non-slip mats or steps in showers and tubs.
- Installation of higher toilets.
A home equity loan can help cover the costs of these improvements, as well as those your loved ones might need later as they get older. You can also consider a Home equity line of credit, depending on your financial situation.
Aging in place during the coronavirus pandemic
As the coronavirus pandemic continues, more adults may wish to avoid assisted care facilities and grow old instead. With more restrictions on transportation and medical care, it’s even more important to make sure the right accessibility measures are in place.
The good news is that the rates on home improvement loans and home equity loans have dropped significantly since the start of the pandemic. Qualifying criteria are more stringent, but you shouldn’t have a problem finding a loan if you have good credit and a lot of equity in your home.
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