This Might Be the Most Manageable Way to Pay for Aging in Place Renovations

published Jul 19, 2023
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My husband and I didn’t purchase our house with the thought of aging in place, but the longer we live in our ranch-style home, the more we realize it’s the perfect place to do so. Since we’re in our 50s, our current projects include replacing timeworn boards on our deck and sprucing up the outside, neither of which are too costly. Still, if we’re truly going to live out our days in our current house, some projects to increase the safety of our home may require a loan.

If you’re considering growing older where you live or have a parent desiring to do so, you may have already pondered renovations that need to be made. Depending on the style of the home, projects like adding ramps and remodeling bathrooms might not be financially feasible without outside financing. In this case, a HELOC loan could be the perfect solution.

“A home equity line of credit, or HELOC, is a type of loan that allows homeowners to draw equity from their home,” says Alec Hanson, the chief marketing officer at loanDepot. These loans are a revolving line of credit similar to a credit card, but the interest rates are often much lower, as you are securing the loan against your property. “HELOCs allow you to borrow what you need, repay it, and then borrow again during the draw period, with interest charged at a variable rate,” Hanson says.

These loans differ from the more familiar home equity loans, which also tap your home equity but are set up more like traditional financing, where you receive money at closing and pay the funds back over a specific period of time. Although these loans are suitable in some circumstances, many require refinancing your home with the cost of upgrades and repairs built into a single mortgage.

In the current economy, a home equity loan may only be the best choice if you buy a property intending to renovate it. “This is an excellent option for purchasing a home in today’s market with limited inventory and higher prices,” says Hanson. Then you can purchase a dwelling that needs upgrades and build funds into the mortgage to turn it into somewhere you can safely age in place with one loan. However, a HELOC is a viable solution if you already own the residence you want to renovate.

“Unlike a regular home improvement loan, a HELOC lets homeowners borrow against their home equity as they need it instead of getting a lump sum upfront,” says Loren Howard, the founder of Prime Plus Mortgages. Howard also highlights other perks to a HELOC loan, such as lower interest rates, longer repayment terms, and access to funds as necessary. “It’s a great choice for homeowners planning long-term projects or needing funds for an extended period,” he adds. 

Another benefit is that a HELOC loan is quicker than refinancing or getting a home equity loan, so if time is of the essence, you won’t have to wait for a closing date and mounds of paperwork to go through. If you choose a digital loan company, Hanson stresses that your loan could be funded in as little as two weeks from the application date, meaning you can start revamping much sooner. 

However, Hanson also advises that a HELOC is something you should consider carefully. “A HELOC is not a bandaid or quick fix,” he warns. As with any financial decision, consider your goals for now and in the future — and weigh the pros and cons. Any loan will impact your finances over time, so chat with a seasoned mortgage professional about whether financing will be sustainable and affordable long-term. 

“This is important, especially if you’re on a fixed income,” adds Hanson. Because the repayment period on a HELOC is usually variable and adjusts with the market, it can be the perfect solution to making your home a place you can stay as long as you’d like.