Housing is the single largest expense category for the aging population. Cost can be a major barrier to home modifications for many residents. In fact, in AARP’s Beyond 50.03 survey of persons age 50 and older, cost was the primary reason respondents did not make the home improvements they felt they needed to age in place. A large percentage of the population isn’t aware of the grants and financial options available.
This article is intended to provide information regarding insurance and personal financing information available to those who would like to age in place:
Long-Term Care Insurance
Some long-term care insurance policies cover special equipment such as ramps and grab bars that assist in the performance of activities of daily living at home.
Fees for durable medical equipment and supplies may be covered by Medicare/Medicaid, provided that the products are ordered by a physician and are medically necessary to treat an illness or injury. For more information contact the Centers for Medicare & Medicaid Services at 877-267-2323. For additional contact info visit the Centers for Medicare & Medicaid Services website.
Medicaid Managed Care Organizations (MCOs) may cover minor home modifications that are necessary to ensure the member’s health, welfare, and safety, or that enable the member to function with greater independence in the home. Each MCO has their own policies and procedures regarding bidding, awarding contracts, doing inspections and completing minor home modifications
Borrowing money for home improvement previously meant going to the bank, seeing a loan officer, and hoping for the best. Today you have many more options:
- Standard loans from banks, credit unions, and brokers are like all mortgages; they use your home as collateral and the interest on them is deductible. Because you probably have a mortgage on your home, any home improvement mortgage really is a second mortgage. A second mortgage will probably cost less than refinancing if the rate on your existing mortgage is low and FHA or VA insure them.
- Home-equity loans offer the tax benefits of conventional mortgages without the closing costs. You get the entire loan up front and pay it off over 15 to 30 years.
- Home-equity lines of credit work similar to credit cards. Lenders give you a ceiling to which you can borrow; they only charge interest on the amount used.
- Personal loans can be used for home improvement. It’s not guaranteed by your home, and the interest rate you receive depends on your creditworthiness.
Reverse mortgages allow homeowners 62 and older to extract home equity without selling their houses. Reverse mortgage issuers pay cash to owners in lump sums or over time. You do not need to pay back a reverse mortgage if you remain in your home and keep up with taxes, insurance, maintenance, and repairs to protect the homes’ value. The money you get usually is not taxable, and it generally won’t affect your Social Security or Medicare benefits. However, there are fees and other costs you need to consider.
Three types of Reverse Mortgages can be used for remodeling:
- Home equity conversion mortgage (HECM) – commonly known as a reverse mortgage, is a home-secured loan that’s exclusively for homeowners and home buyers age 62 and older. It allows borrowers to convert some of their home equity into income tax-free funds. HECMs are insured by the FHA. This important insurance feature protects the homeowner and his heirs from ever owing more than the value of the home at the time the HECM must be repaid. HECM loans can be used for any purpose.
- Property reverse mortgages are private loans that lack the government insurance of HECMs. Their primary edge for homeowners is they generally offer bigger loan advance to those with more expensive homes. HECMs in 2018 are limited to properties worth up to $679,650, but proprietary reverse mortgages have no such limit.
- Single-Purpose Reverse Mortgages are the least expensive reverse mortgages since their proceeds can only be used for a single, agreed upon, use. They are sometimes offered by state or local government agencies or nonprofit organizations. Typically, they are designed for homeowners with low to moderate incomes, and they are not available everywhere.
Rural Housing Administration
USDA Rural Development Section 504 loans and grants are available to assist eligible, very low-income, homeowners with repair of their home; as long as the home is located in a rural area. Repairs may be made to improve or modernize the home, to make it safe and sanitary, or to remove health and safety hazards. Grants are only available for repairs that remove health or safety hazards.
For information, go to www.rd.usda.gov/ and search for Section 504 loans and grants.
Public and private financing options may also be available:
- Modification and repair funds provided by the Older Americans Act are distributed by Area Agencies on Aging (AAA). To contact your local AAA, contact the Eldercare Locator at 1-800-677-1116 or https://eldercare.acl.gov/Public/Index.aspx.
- Local energy and social service departments can assist through the U.S. Department of Energy’s Low-Income Home Energy Assistance Program (LIHEAP) and Weatherization Assistance Program (WAP). You can also search for state-specific tax credits, rebates, and savings at https://www.energy.gov/savings/search.
- Search for additional resources in your state by visiting https://homemods.org/.
To discover additional grant options, please read the article Available Grants for Those Who Qualify.