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Dynamic Chiropractic – March 11, 2004, Vol. 22, Issue 06

Financing Home Renovations and Repairs

By Barbara Zapotocky-Cook, DC
Several Saturdays ago, I attended a workshop titled, "Home Improvement, Alzheimer Style," presented by the local Alzheimer's Association. An architect specializing in adapting homes for older adults made the presentation; his emphasis was on security, accessibility and affordability. It was a great presentation, and looking around the room at the other 40 attendees, it was obvious that Baby Boomers and spouses/caregivers were very interested in the subject matter. If your patient load includes Baby Boomers, it's likely many of them are dealing with these issues, too.

I decided to attend the presentation not because my parents are victims of Alzheimer's, but because they are considering some renovations to their 80-plus-year-old home, in lieu of moving to a retirement facility. Their home has a rental unit that has provided additional monthly income for many years. After carefully checking out all of the options available to them, they have opted to stay in their centrally located, safe, stable neighborhood, near shopping, health care professionals and their beloved beach, which they both use on a daily basis.

Both of my folks are in their mid-80s, and although they've experienced knee replacements and hip fractures, they continue to navigate many steps on a daily basis, several times a day. Each time they want to pick up the newspaper, mail, laundry or groceries, they must use the steps, a safety concern with potential for further injury.

Most urgently, the house needs a new roof and a new solar panel to keep their electricity charges at bay; an age-friendly bathroom; laundry facilities located on the same level; and an elevator to take them from the garage directly to their third-floor living quarters.

Here's what our research has told us so far: It will probably cost them anywhere from $100,000 to $150,000 to do what they want to do. This seems a staggering amount, until you consider that it would cost them from $3,000 to $5,000 per month if they were to rent a unit in a retirement facility in a location where they might not be as happy. Looking at it from that point of view, in four years or less, they would have spent the money anyway, and at least making home improvements allows them to continue to live in the same location and keep their asset.

The biggest challenge many older adults face when renovating their homes is how to pay for them. Many are on fixed incomes with few resources. Their property may have increased in value, but they are cash-poor.

At the home improvement workshop, a flyer was distributed that provided a telephone number for the city and county Elderly Affairs Division Rehabilitation Loan Program. Many cities have similar funds available as a means to assist individuals to stay in their own homes, rather than move to more costly facilities. I spoke to a gentleman who was quite helpful; he explained that the loan program was available to a person or family requiring home modifications, based on a health or safety need. The home loan program required that an application be submitted with information about the number of persons living in the household and their combined annual income. This information was then used to determine the interest rate for the loan. For example, for combined incomes of less than $41,000 or so, the interest rate was 2 percent; for less than $52,000, 4 percent; and so on.

Another option I found on my city's Web site deals with reverse mortgages. A reverse mortgage is a special type of home loan that lets a homeowner convert a portion of the equity in his or her own home into cash. The equity built up over years of home mortgage payments can be paid to the owner, but unlike traditional home equity loans or second mortgages, no repayment is required until the borrower no longer uses the home as the principal residence.

Reverse mortgages are available through different lenders, as well as HUD. There are some property restrictions, but single-family homes, two-to-four-unit properties, condominium units, townhouses, and some manufactured homes are eligible. Generally, the greater the value of the home, the older the owners, the lower the interest rates, and the more one can borrow. This is good news right now, with interest rates so low, and it is an opportunity for your patients who have a higher annual income that disqualifies them from other programs. And if they live in an area of the country where land or home values are traditionally higher, such as Hawaii or New York, it may be the best option available for refinancing.

Wow! There's certainly a great deal to learn before we begin this project, but the process is an interesting one. I am encouraged that our research has uncovered programs both locally and nationally to help senior patients stay in their homes if they so choose. Check out your local city and county Web sites and see what programs are available in your area, then share the information with your patients. Good luck!

Barbara Zapotocky Cook, DC, MA
Honolulu, Hawaii

Click here for previous articles by Barbara Zapotocky-Cook, DC.

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