Consider Financing Options When Choosing Independent Senior Housing

May 7th 2016

Moving into independent senior housing can be a stressful, expensive affair. Finding adequate financing to make the move can be half the challenge. Many resources are available to help seniors to finance independent senior housing, helping to bring independent living within the budget of many seniors.

Veterans Benefits

The Department of Veterans Affairs provides a housing benefit for qualified veterans and their survivors. This benefit takes the form of a direct housing subsidy and is exempt from taxes. As of 2015, the amount offered by the VA ranges from $1,094 to $2,019 a month, which is often sufficient to cover all of the costs associated with independent senior housing.

To qualify, you must have served at least 90 days in the U.S. military, with at least one day of service during wartime, and have earned an honorable discharge. Widowed spouses of qualified veterans are also eligible for this benefit. Access to the program is partly dependent on income, which must be verified before benefits are provided.

Insurance Policy Conversion

Some seniors finance long-term independent housing by converting their life insurance policies into a housing subsidy. Organizations such as Life Care Funding Group can deposit seniors' life insurance benefits into a long-term care benefit account, which is then tapped for monthly payments to the long-term care provider. This type of financing has multiple advantages, as it is applied toward both VA- and Medicaid-qualified spend-downs, which brings certain tax advantages, and the recipient is no longer required to pay monthly insurance premiums.

Seniors Credit for a Short-Term Solution

For many seniors transitioning into independent housing or long-term care, opening a temporary line of credit helps bridge the gap between moving into a new residence and starting to receive a permanent housing subsidy. VA benefits can take weeks or months to come through, so companies such as Elderlife Financial offer seniors the necessary funds to complete a move and maintain their standard of living until their finances have stabilized.

Such loans are often available at low interest, with low monthly payments and flexible repayment terms. This option may be especially attractive for seniors who are waiting on the sale of a house after their move. Financing housing costs at low interest buys extra time to leave the house on the market for an extra few weeks or months, which may attract higher bids and lead to a considerably higher selling price. In this way, a temporary line of seniors' housing credit can actually pay for itself.

Home Equity

Some senior residences offer instant financing of move-in costs and housing fees with just a promise to pay backed by the equity in a senior's house. When a senior owns a home but wants to move into a retirement community immediately, it may be possible to present the community management with a fair market assessment of the senior's house and a promise to pay some fixed percentage of the asking price — usually around 20 percent of the fair market value and then begin the move while the house is still on the market. With this arrangement, the senior can move immediately at no cost, the facility is confident that all expenses will eventually be paid on the sale of the home, and the pressure to sell the house is lifted for several months following the move.

Many options exist for seniors who are looking for financing options in long-term independent living. Sometimes, housing costs may be paid by the VA, or they may be covered by the accumulated value of a life insurance policy. Other times, the cost of retirement housing can be covered by the equity in the senior's home, whether before or after the sale is complete. Many seniors are able to take advantage of more than one financing option, which can bring excellent independent living options within reach for most retired people.

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