Using Reverse Mortgages for Home Improvements
Over the course of my career originating reverse mortgages I have watched my clients use the proceeds from their reverse mortgage for a wide variety of reasons. Among the most common uses of these proceeds is for home improvements. Many of my clients have lived in their homes for several years and often there is a need for upgrades to various parts of their homes. Generally speaking, I would put home improvement projects into two basic categories: required deferred maintenance and aging in place upgrades. Let’s take a look a required deferred maintenance first.
Required deferred maintenance is the less glamorous side of home improvement projects. This type of maintenance includes items such as putting a new roof on your home, interior or exterior painting, new windows, or possibly even a new furnace in the basement. Although less glamorous, these items can often give the homeowner peace of mind and can sometimes be required by the reverse mortgage lender to be completed as a condition of the reverse mortgage loan. The regulator of reverse mortgage loans is the Department of Housing and Urban Development (HUD). When creating the regulations for reverse mortgages HUD realized that many seniors seeking a reverse mortgage may have been living in their homes for decades and that some of these deferred maintenance items would need to be completed. Often these borrowers do not have the money to do this maintenance before the loan closes so HUD put in place a unique feature in the reverse mortgage regulations that allows the borrowers to close the loan before this work is done. This allows the borrower to access the equity in their home first and do the necessary repairs later. In a conventional “forward mortgage” these repairs would need to be completed before the loan can close.
The other basic category of home improvement is aging in place upgrades. There are many upgrades that a senior would want to have throughout their homes while they age in place. Many of my customers have upgraded their kitchens and bathrooms with features which will make it easier for them as they get older. A common upgrade in the bathroom is the addition of a walk in shower and handrails. On more than one occasion I have had my clients tell me that they plan of converting one of their downstairs rooms into their master suite and leave the stair climbing to the bedrooms upstairs for the grandchildren. Also, a common change that I see is to have the washer and dryer on the first floor. No more going to the basement to do laundry!
Not all of the aging in place improvements are limited to the inside of your home. Just recently I had a client that was planning on doing quite a bit of work to make her home wheelchair accessible from her driveway. Another client was having a hot tub installed on the new patio he was having built. There really is no limit on the various upgrades you can do on your home, inside or out, with the proceeds from a reverse mortgage.
With over 10,000 people each day turning 65 there will be an increasing need for seniors to do required maintenance as well as aging in place upgrades. Using the proceeds from a reverse mortgage to make these improvements is a great way for seniors who have their wealth “trapped” in the equity of their homes.
Dan Collins is a Reverse Mortgage Specialist (NMLS # 30130) with Continental Funding Corporation (NMLS # 2723) He has been specializing in Reverse Mortgages for over 10 years. He has also been featured on the FreeMoneyRadio program and can be reached at 9782398446 or [email protected].
For a free copy of The National Council on Aging’s booklet titled “Using Your Home to Stay at Home” feel free to contact Dan at the information provided above and he will get a copy in the mail to you right away. This booklet contains excellent information about a wide variety of options to help senior citizens remain in their homes after they retire.