Seniors have more housing options today than ever before.
For seniors over age 62, special financing plans are now available to build a second "accessory apartment" in a single-family home. The apartment, containing a room, bath and private entrance, could provide the older person with independence and privacy but with nearby help from a tenant if needed.
Special financing also is available to build a separate, self-contained housing unit on the lot of an existing home of a relative. Or a senior could convert his home into a multihousing structure with up to four units.
Still another option for seniors is to receive favorable financing when selling his or her home to a family member or investor, then leasing it back (sale, lease-back arrangement). This allows the senior to receive proceeds of the sale without moving.
Financing for all these situations is provided through a special pilot program launched late last year by the Federal National Mortgage Association -- Fannie Mae. It's called the Senior Housing Opportunities (SHO) program.
The loans, giving seniors favorable terms and greater qualification leniency, are available from primary mortgage lenders in all 50 states. After the loans are funded, they can be sold by the lender to Fannie Mae, the nation's largest investor in home mortgages.
It's not surprising that Fannie Mae and other agencies and companies are developing new housing programs for seniors. Seniors constitute the fastest-growing segment of our market.
In 1988, seniors age 65 and older made up about 12.4 percent of the U.S. population, according to the American Association of Retired Persons (AARP). That translates to one in every eight Americans -- or about 30.4 million people.
By the year 2000, about 13 percent of the population -- or 34.9 million Americans -- will be 65 or older. By the year 2030, the number will climb to about 21.8 percent, or 65.6 million Americans.
Another increasingly popular plan whereby seniors can receive financial assistance and still continue to own and reside in their established residence is the use of a reverse mortgage.
This concept provides senior homeowners (age 62 or older) the opportunity to receive monthly tax-free payments from a mortgage company by tapping the accumulated equity in their home. And in the most popular reverse-mortgage plans, those payments continue for the life of the person or as long as he or she owns and resides in the home.
A study by AARP revealed that 56 percent of seniors in the United States are now aware of reverse mortgages. And that "awareness proportion" is steadily growing.
The same AARP survey indicated that 86 percent of today's senior homeowners prefer to remain in their own homes after retirement. That segment of seniors is up from 78 percent in 1986, reflecting a substantial increase.
The typical reverse mortgage user is a widow or widower, age 75, according to James J. Burke, president of American Homestead Mortgage Corp., based in Mount Laurel, N.J. That typical user owns a home valued at $150,000 and receives about $750 per month tax-free from American Homestead.