Financing a Greener House
With all of the focus on green technologies and efficient housing, many consumers are looking into ways to turn their existing home into a bold, eco-friendly statement. And, while that process is often an attractive one, it comes with a pretty large number of expenses and overall costs that can be hard for people to afford. That's especially true in economic times like the present, when words like "uncertainty" and "turmoil" dominate the headlines. Luckily, however, there are a few great programs to help finance these environmentally-friendly changes.
And, even better than excellent financing options, consumers will find many home improvements that are more simple and cost effective than they might have originally hoped.
When Going Green, Look into Special Mortgage Products and Government Programs
The government has certainly not been silent on the issue of green building and renovation. In fact, the Obama administration has been rather aggressive when it comes to passing tax cuts and mortgage benefits for those who seek to help reduce the country's dependence on foreign oil. While the administration's tax credits for things like efficient appliances, insulation, and new windows, have expired as of 2011, many incentives still remain in place.
The Energy Policy Act of 2005, proposed by the Bush administration and maintained by the current one, allows a number of tax deductions and credits for green energy sources. The bill specifically allows homeowners to get a tax credit for installing combined heat and power systems, green sources of renewable energy, and for buying an efficient, plug-in electric vehicle. With technologies like solar panels coming down in price dramatically, this tax credit can significantly reduce the cost of switching to renewable energy sources at home.
Looking Beyond Tax Incentives: Special Mortgages for Going Green
Beyond federal tax programs, a number of other financial tools can help pay for eco-friendly renovations. One of the best ideas is to refinance an existing mortgage or convert it to an EEM, or energy efficient mortgage. These mortgages actually allow for a home's energy savings to be credited toward the mortgage's actual balance. Over time, this can greatly reduce the cost of the home – and those eco-friendly renovations. These mortgages can be taken out as a type of loan against the costs of energy efficient technologies, making home repairs far more affordable than traditional bank loans, or even standard mortgage products.
These mortgage products are most often secured from the Federal Housing Administration (FHA), although there are some options for military veterans as well. Those products are available through the Veteran's Administration, with slightly different lending and energy credit terms. Either way, both products are excellent ideas when it comes to affording home upgrades, and paying for them much faster than would typically be expected. Plus, with more affordable interest rates than many competing mortgage loans, homeowners will actually save on their monthly payments after refinancing.
Going Green on a Budget: Not Every Change is a Big Expense
When most consumers consider going green, they think of solar panels and high-efficiency home climate control systems. Those happen to be among the most expensive changes a homeowner can make, and they're often so intimidating that the idea of going green soon gets deemed as unaffordable, impractical, and not worth the expense. But, while those big expenses are surely some of the best ways to enjoy eco-friendly living, they're not the only ones. Some of the changes that can be made in today's homes are pretty basic – and pretty affordable.
One of the best ways for an existing home to "go green" is to simply swap out existing doors and windows for those that have been rated as more efficient. All too often, existing windows date back to an era when efficiency was a secondary concern, or technology simply didn't enable the type of eco-friendly windows that exist today. This represents a pretty small investment, relative to the cost of a home's full renovation, and can lower your heating and cooling bills between 10 to 15 percent according to the U.S. Department of Energy throughout all four seasons.
Best of all, these new and more efficient windows or doors can be combined with
a programmable thermostat for an effective one-two punch. With a more efficient home, combined with a smarter climate control system, the savings will be real and significant.
In the Kitchen and Bathroom, it's Time to Use Less Water
In the kitchen and bathroom, moving toward a more efficient lifestyle can be accomplished by moving to low-flow systems in the shower, sink, and even toilet. These low-flow systems use far less water, consume less energy, and promote a greener living situation. And they're a far lesser purchase than a complete renovation of these rooms. Because kitchens and bathrooms do tend to incur the largest renovation expense, this is a great option for homeowners on a strict budget. It promotes small, incremental, and affordable moves toward a more eco-friendly lifestyle. Click here for individual breakdowns of various low-flow systems.
These areas can also be upgraded by switching to highly efficient appliances. Each appliance's energy rating is granted by Energy Star, making it possible to shop for those that are the most affordable and the most efficient, without doing timely calculations or talking to nagging sales representatives.
Plenty of Ways to Afford a Greener Lifestyle
The move toward a green lifestyle doesn't have to be a huge expense, or require an impractically large loan. With energy efficient mortgages and rebuilding loans, as well as federal tax incentives for going green, the process is very affordable both now and for the long-term. With a commitment to great financial tools, and a sensible approach to picking the most affordable renovations, homeowners can leave their "energy hog" lifestyle behind and commit to one that is friendlier to the environment.
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