Making and Financing a More Energy Efficient Home

With Earth Day upon us, you might have a renewed desire to make your home greener. Yes, you can dry your laundry on a clothesline all day to save energy or blast a fan in every room this summer to avoid turning on the air conditioner — but you may want to stay sane, too. A longer-term strategy might be installing features that improve your home’s energy efficiency. Looking for ways to increase the value of your home – while also protecting the environment and saving on monthly bills – is always a good idea. Here are several projects to consider, plus a look at financing them:  

Solar panels

1. Power up with solar panels

Now’s your chance to make your home futuristic. If you can take advantage of your rooftop by installing solar panels, you can save on both energy costs and on taxes. According to the Internal Revenue Service, you may be able to get back 30% of the cost of solar electric equipment as a tax credit (See this link for more information).

Granted, tax season has (fortunately) come and gone this year, but you may see a difference on your taxes next year if you install soon. Just be sure to heed the advice of the BBB on selecting a contractor before you decide to install solar panels to ensure you really are going to benefit financially from your decision.

2. Bring in a solar water heater

To save energy on hot water at home, install a solar water heating system. There are two main systems available: direct and indirect circulation. Which one would work best for you depends on the climate. If you’re in a place where water freezes and snow conquers driveways, the indirect circulation model uses heat-transfer fluid to keep water at optimal temperatures.

3. Replace drafty windows and doorsSolar panels

Don’t let the wind dictate your wardrobe, especially indoors. If you have windows or doors that don’t close properly, install new ones and save yourself from extreme outdoor temperatures and possibly low morale. Replacing your front door with 20-gauge steel, for example, may cost $1,200 but can add at least that much to the home’s resale value, according to Remodeling Magazine.

4. Turn that new light bulb on

Say goodbye to incandescent bulbs and replace them with compact fluorescent light bulbs (CFLs) or bulbs with light-emitting diodes (LEDs). Using 70% less energy and lasting 10 times longer, these bulbs really are a “good buy” versus those older models.


Getting the money

As you consider setting up solar systems or other features, see what you can afford from your savings. But the costs might be more than you can spend in cash right now. If that’s the case but you’ve paid off a good amount on your mortgage, you might be able to borrow against your home’s equity — its market value minus your mortgage debts. Lenders like Logix Federal Credit Union may let you borrow a percentage of your home equity with credit qualification.

Orange is the new greenWhile home equity loans typically have fixed interest rates, meaning the monthly payment remains the same, a home equity line of credit, or HELOC, generally has rates that can change periodically based on a market gauge also known as an index. HELOCs are similar to revolving charge accounts, as the borrower only uses as much as needed and pays interest only on the amounts actually used. Home equity loans typically deliver a lump sum up front and the interest accrues on the entire amount as it’s paid off.

The upfront costs of borrowing for both of these types of debt can be relatively high and include things like appraisal and title-search fees, taxes and sometimes attorney fees. Bear in mind, too, that defaulting on either kind of loan can lead to foreclosure.

In looking into these eco-friendly projects, you’ll be able to save money on your energy bill and help the planet with a lighter carbon footprint. It also helps that you can do this without enduring indoor temperatures that require jackets, swimsuits or both in the same day. Understanding your financing options can also help make your move to cleaner energy easier and even boost your home’s value in the long run.


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