Full Guide: How to Finance Age-in-Place Renovations
Obsess over how much you can give with your time rather than how little of your time you can give. –Sam Parker
In a 2018 study, AARP found that 76 percent 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 in 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. Though the renovation costs may be high, aging in place can often be cheaper than an assisted living facility would be — especially if you plan ahead.
For the budget-minded homeowner, there are several ways to finance the aging-in-place process, including:
Home renovation loans.
Home equity loans/home equity lines of credit (HELOC).
Reverse mortgages.
Government grants and loans.
It is best to begin planning for aging-in-place renovations early, long before you retire. If you haven’t started planning just yet, there are still financial steps you can take to remain in your home. This guide breaks them all down.
What’s your current situation?
I’m still employed and I 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. 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 (this 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.
Financing those renovations
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 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, 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 since 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.
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 need some accessibility renovations, like nonslip flooring (especially in the bathroom), grab bars around the toilets, a ramp or wider door for your walker, or a low-rise tub or shower with a no-step entry. But how can you finance these renovations?
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.
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 they’re 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 shower heads.
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 ones may require later as they age. You may 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 and more adults may 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 are 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.