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How to finance aging-in-place renovations: A fully accessible guide

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 A 2021 AARP study found that three-quarters of people age 50 and older would prefer to stay in their own homes as they age. It’s a process known as aging in place — one in which seniors retrofit their properties to accommodate growing older, rather than moving out to an assisted living facility, into a nursing home or living with a loved one.

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 early because the costs can be high.

Best financing options for individual situations

The situation you are in will usually determine which type of home improvement loan funding option will work best for you.

I’m still employed and haven’t retired yet

Best for you: Home improvement loan or home equity loan/HELOC

If you’re still employed but considering aging in place, now’s the time to start planning. If you own a home, you’ll want to start making the property more accessible as soon as possible. Ideally, you can spread your renovations out over time to reduce the costs and hassle, but depending on your age and retirement timeline, you might need to do several renovations at once to ensure that your property is ready.

A quick caveat here: Renovating your home for old age doesn’t have to mean a cold and clinical design. In fact, it’s usually better to integrate aging in place into other home improvement projects than do them on a one-off basis. This way, you can have the interior design you want while also improving your home’s accessibility, which also helps ensure your home’s value and marketability when you’re ready to sell it.

For example, if you’re redoing the cabinets in your kitchen, you could consider replacing the knobs with D-shaped pulls to make gripping easier as you age. Small steps like that can help prepare you for larger aging-in-place renovations in the future.

I’m retired and on a fixed income

Best for you: Home equity loan/HELOC, government assistance, reverse mortgage

If you’re currently retired, you may already be in need of some accessibility renovations, like nonslip flooring (especially in the bathroom), grab bars around the toilets, a ramp or a wider door for your walker or a low-rise tub or shower with a no-step entry.

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.

I’m moving in with a family member

Best for you: Proceeds from your home sale, personal loan, low-interest credit card

Best for your loved one: Home equity loan/HELOC

Moving in with a family member or loved one may mean that you have fewer options for customizing your living space. It may not be the most ideal option for aging in place, but it gives you the chance to live with your loved ones and have a home within a home. To start, talk with your loved one about potential renovations to make the property safer and more accessible.

The most important changes will be in the room or suite you’ll be staying in. These can include things like:

  • Installing motion-activated lights or lighted switches.
  • Switching out doorknobs for levers.
  • Replacing tile with carpet or other nonslip flooring options.
  • Widening doorways for walkers and wheelchairs.
  • Removing blinds and hanging light window coverings to maximize natural light.
  • Installing handrails on or near the bed.

If your family member is amenable to these smaller updates, you may also want to speak with your loved one about renovating any common areas. Open shelving in the kitchen, grab bars in the bathrooms and a ramp at the front stoop can all be small but effective adjustments to help you age safely in your new home. Lowering the sinks and countertops 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’re selling your home before move-in, the sale proceeds can go toward any renovation costs you might encounter. If you’re not selling a property, you may consider a personal loan or a low-interest credit card to cover the costs.

If you’re on the other end of the equation — and an aging loved one is moving into your existing home — then carefully consider the space in which they’ll live. If you don’t have a dedicated room they can stay in, then you might consider adding a mother-in-law suite or accessory dwelling unit on the property.

If you do have an available room, make an effort to improve its accessibility before your loved one moves in. The small changes above are a great place to start, as are updates to the bathroom they’ll be using. These can include:

  • Adding a fold-down seat in the shower.
  • Installing handheld showerheads.
  • Adding grab bars in the bathtub and around the toilet.
  • Putting nonslip mats or tread in showers and tubs.
  • Installing a taller toilet.

A home equity loan can help you cover the costs of these improvements, as well as any your loved one may require later as they age. You may also consider a home equity line of credit, depending on your financial situation.

How to finance home renovations for accessibility

Most people reach their peak earning years in their 40s. 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, then your two best financing options for aging-in-place renovations 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. Home equity loans and HELOCs usually come with repayment periods of anywhere from 15 to 30 years. If you are unsure if you will continue to live in your home past retirement, we recommend a home improvement loan.

Aging in place during the coronavirus pandemic

Even with the coronavirus pandemic winding down somewhat and many services available again, many adults may still wish to avoid assisted care facilities and instead age in place. With more restrictions around transportation and medical care, it is even more important to ensure that the appropriate accessibility measures are in place.

The good news is that rates on home improvement loans and home equity loans have fallen dramatically since the start of the pandemic. Qualification criteria is tighter, but you shouldn’t have a problem finding a loan if you have a good credit score and lots of equity in your home.

Frequently asked questions

When should I start planning and preparing for aging in place?

Even though you may still be employed, if you’re contemplating aging in place and are reaching the end of your career, it’s a good idea to start planning. If you’re a homeowner it can be easier on your budget to spread needed renovations over time.

How should I fund renovations if I’m already retired and living on a fixed income?

If you’ve already retired and your budget is limited, one of the best options to pay for renovations may be tapping into the equity in your home via a home equity loan or home equity line of credit (HELOC). You might also consider a reverse mortgage, which is also known as a home equity conversion mortgage. Reverse mortgages are a type of loan that provides cash from your home’s equity either via a single payment or through ongoing monthly payments.

I’m planning to move in with a loved one, do I still need to worry about advance preparations?

Yes, even if you anticipate moving in with a family member or loved one, their home may still require some modifications to accommodate your needs later in life. However, living with someone else may mean you have fewer options for renovations or customization.

It’s important to talk with your loved one or family member well in advance about any changes that may be needed to make the home safer and more accessible to determine what might be done, how much it will cost and how the expenses will be paid.

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