Financing Construction Costs and Home Modifications

. February 2, 2017.
MLiving-Building-Construction-Finance

Construction costs for adjustments and repairs can often cause financial tensions without careful planning and helpful resources. Adjustments and repairs often involve physical modifications for changing needs including installing walk-in bathtubs, smoothing floor surfaces or changing water faucet handles to easy-to-use fixtures and pull out shelving. Be sure when you’re making the modifications to use a licensed, bonded, and insured contractor. But first you have to plan where will the money come from? Loan? Savings? Retirement plan (e.g. 401K)? We got the facts with some insight from Area Office on Aging of Northwestern Ohio, Inc. and PNC Bank.

Gov’t Loans and Grants

Government organizations like Veterans Administration, Department of Housing and Urban Development (HUD) and the U.S. Department of Agriculture (Rural Repair and Rehabilitation) offer competitive loans. HUD provides grants for home repairs each year by giving money to states and local agencies including local Area Agencies on Aging. These agencies help senior citizens with a variety of needs including home repair, often for free. Awards depend on the applicant’s income and some are free while others are charged on a sliding scale. The Area Office on Aging of Northwestern Ohio, Inc. serves ten NW Ohio counties. “We offer several home repair programs,” says Justin Moor, vice president of communications at the agency areaofficeonaging.com 419-382-0624. “These programs are worth trying first before using savings, a 401k/retirement account or reverse mortgage/loan.” With a few special exceptions (e.g. assistive technology devices), Medicare and most other private insurance typically do not pay for the cost of home modifications. Free labor requires pay back of the materials as the personnel resources typically comes from non-profit organizations or charities like Habitat for Humanity, Rebuilding Together and NeighborWorks. Grants must be used for the modification purpose, which might require confirmation/proof, and do not need to be paid back. The Low-Income Home Energy Assistance Program (LIHEAP) is a good example of a grant that can help pay utilities when making energy saving modifications.

Commercial Lending Options

Reverse mortgages are a possibility only with residents living in the home for a number of years. See www.ncoa.org/economic-security/home-equity/reverse-mortgages/ for more information. Homeowners with equity might want a low interest Home Equity Line of Credit. “A lump sum loan is a one-time, closed-end loan that usually has a fixed interest rate while a line of credit lets you withdraw the funds any time and usually has adjustable interest rates,” says PNC Loan Officer Joshua Harrison. “It’s important to try for a loan on a nationwide, state and/or county level (visit www.usa.gov/state-tribal-governments) as well as a type that has the lowest possible interest rate for older adults.” Community Development Financial Institutions can also provide financial help. The Heritage Home Program (www.heritagehomeprogram.org/loans/loans.php) uses a partnership with KeyBank for loans. You can also contact your banker for information on applications independent special needs assistance. Whatever your choice, be sure to confirm the qualifications of any lenders with The Ohio Department of Commerce at 1-866-278-0003. Home construction or modification costs may be expensive but before you deplete your savings or take out a costly loan, consider the tips above – your home sweet home can always offer you the mobility and comfort you need.

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