Aging in place can be cost effective, but requires good financial planning.

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Most older Americans hope to live at home as long as possible, a practice called aging in place. In fact, a recent AARP study found that 3 in 4 adults age 50 and older want to live in their homes and communities as they age.

According to Orion Bell, president and CEO of the Benjamin Rose Institute of Aging in Cleveland, the good news is that aging on the spot is “often the most cost-effective” housing solution for older people.

“So, if this is what they want to do, then this is the ideal scenario,” Bell said. “But it is a mistake to think that aging happens just like that. Older people and their families should be actively involved in creating the plan. ”

He added that money is an essential part of this planning.

Home modifications by age on site

Even minor changes that make a home more accessible can quickly add up. And people who will stay in their homes as they age should expect to incur maintenance costs that they can no longer do, such as mowing lawns and cleaning the house, and the real likelihood that someday they will need help with personal or personal matters. health care.

More: Aging problems in place

Sonia Edwards, broker and CEO of Branches Real Estate, a subsidiary of the Benjamin Rose Institute of Aging, said about 75% of people age 85 and older report some degree of persistent restriction in daily activities such as eating, bathing, or refueling. …

Medicaid, in some limited cases, will cover care for people; Medicare doesn’t.

Edwards advised senior homeowners and their families to consider using home equity to cover living expenses, be it one-off expenses such as home remodeling, permanent care, or both.

Learn more: What your home needs if you want to grow old in place

Secured home equity loans and home equity lines

Home equity loans and home equity lines of credit (HELOCs) are two of the best financing options locally, as any product can be obtained quickly with relatively low upfront costs, Edwards said.

Home loans are ideal for large one-time expenses in excess of $ 15,000, such as remodeling or expensive home renovations, she said. The loan is issued in a lump sum, and payments are recorded in time.

On the other hand, HELOCs are more like a credit card. The homeowner is given a set credit limit and can withdraw money as needed, making these lines of credit more convenient to cover running costs.

“So, if you plan on making changes to your home over the course of several years, rather than all at once, or want to provide access to cash for unforeseen repair or maintenance costs, lines of credit are a good choice,” she said.

Edwards noted that one of the downsides of Home Loans and HELOCs is the high financial and credit requirements, which can be difficult for some homeowners to meet. And monthly payments can be risky for people with fixed income, especially when unexpected expenses arise.

“These types of loans are secured by the home,” she said. “If they are not returned, the elder may lose his home. Make sure you have a reliable repayment plan and only borrow what you need. “

Pros and cons of reverse mortgages

Reverse mortgages are another alternative… They get a “bad reputation,” Edwards said, and often for good reason. They are among the most expensive loan products, she said, and homeowners lose “most of their capital” when they get a loan back.

“But not all of them are bad,” says Edwards. However, she added, “you have to be in the perfect storm to really make the reverse mortgage work.”

Reverse mortgages allow homeowners over the age of 62 to access a portion of their home equity in the form of cash. Borrowers do not make monthly mortgage payments as long as they continue to live in the home.

The credit requirements for reverse mortgages are often less stringent than conventional home loans. This, plus the lack of the required monthly payments, are two of the main benefits.

But as interest is added to the loan every month – and homeowners are not making payments – the balance on the reverse mortgage grows over time. When the last borrower who signed up for a reverse mortgage dies or leaves home, the loan is due for repayment.

“Reverse mortgages are tricky and complex,” Edwards said. “I recommend talking to an experienced housing consultant before going down this route.”

Seniors can also take advantage of special programs designed to help cover the cost of home remodeling. Many states and municipalities, for example, offer grants and low-cost loans to make homes comfortable for seniors, and some organizations provide funds for veterans to adapt their homes free of charge.

We come to the right decision

Edwards said seniors and their families also need to learn about tax and legal issues that affect their home values. Homestead loans, available in many states, can reduce the tax burden and free up money for other expenses, she said.

Unfortunately, in some cases, aging at home may not be possible. But Edwards said exploring funding options is an important step towards realizing the need for a transition.

Bell emphasized that one of the functions of caregivers is to help their loved ones analyze and understand the perceived problems that may arise due to aging so that they can make appropriate decisions.

“It’s much less resentment and much less loss of control when it’s their decision,” he said. “You can be a part of it, you can be the person from whom they push ideas away, you can make suggestions, but this is their life, this is their decision.”

Read on: This 98-year-old has 4 tips for a satisfying retirement

Ultimately, Edwards added, the goal is to feel like you and your family have turned over all the rocks and exhausted all options before considering other housing options.

Judy Stringer is a freelance writer and editor with over 25 years of media experience. Many of her frequent articles are published at Crain’s Cleveland Business, where she also writes for the Crain Content Studio’s user-generated content department. In addition to business, she covers community news and oversees special topics on senior life, wellness and home improvement for ScripType Publishing, a collection of nine monthly magazines in Summit and Cuyahoga counties in Ohio.

This article is reprinted with permission. NextAvenue.org, © 2021 Sister Cities Public Television, Inc. All rights reserved.

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