One of the most widely-discussed reverse mortgage uses is to facilitate aging in place. Instead of a senior moving into some sort of assisted living facility, a reverse mortgage can supplement create liquidity and enable seniors to remain living in their longtime homes.
Sometimes a senior’s home may have issues that need to be addressed in order to allow them to live in the home for as long as possible, and home renovations can be costly investments. This is where the reverse mortgage can potentially be put to work, since the loan proceeds could be used to fund home modifications that make aging in place easier for some seniors.
In a recent column in San Diego’s Uptown News, the idea of using a reverse mortgage to fund aging in place goals was discussed, which makes sense considering the home equity levels of seniors in Southern California.
“A reverse mortgage might be a good option for some retired people,” the column reads. “It is another way to borrow against the equity in your home. However, the retired person does not need to make payments on the loan. This makes it a good option for accessing capital when you don’t have the retirement funds to make loan payments.”
The column does make mention about needing to pay close attention to the loan’s terms, but reverse mortgages for the use of home renovations has also been a potential business avenue identified by the industry itself. Finance of America Companies (FOA), for instance, launched a vertical called Finance of America Home Improvement which has potential to interact with the company’s reverse mortgage lending arm, Finance of America Reverse (FAR).
When FOA exited the forward mortgage business, company leaders said that its specialty finance and services (SF&S) businesses — including FAR and the home improvement segment — were some of its best paths forward.
Because of a spike in senior-held home equity — which, at last count, totaled over $11 trillion — there could be further potential for seniors to use that equity to fund more aging in place projects.
This past summer, the U.S. Department of Housing and Urban Development (HUD) announced that it would be adding new funding to programs designed to facilitate aging-in-place goals specifically for American seniors in order to address ongoing senior livability issues and to allow more seniors to remain where they are.
