Energy Efficient Mortgages Reduce Your Monthly Housing Expenses

When a lender figures the monthly mortgage amount that a buyer can afford whether it’s a purchase or a refinance, the amount is calculated to include principle, interest, taxes and insurance or PITI.  But there’s another cost that is beginning to be taken into consideration—utilities.  If you buy an older home with old single pane windows, old appliances, an old furnace, poor insulation, etc., the monthly cost to own the home can increase dramatically.  If you don’t have the money to replace some of these items immediately you could spend hundreds of dollars more each month on energy   costs.  And if you decide to make some of the improvements or buy appliances on your credit card that just adds to your debt at pretty high interest rates.

But the FHA 203(b) loan, or Energy Efficient Mortgage (EEM) Program can help buyers and refinancers to make their homes more energy efficient and save a considerable amount on their monthly utility bills.  “The EEM Program recognizes that the improved energy efficiency of a house can increase its affordability by reducing operating costs.  Because the home is more energy efficient, the occupants will save money on utility costs” and significantly reduce the amount of money needed each month to operate the home. So here’s how it works.  When you take out an FHA 203 (b) loan you can add up to $8,000 to the loan amount even if it goes over the FHA maximum loan amount or over what you qualify for.  This additional amount is at the same rate as the original loan.  So if you lock in at say, 4.25%.  The additional amount is rolled right into the loan at the same rate. Here are some of the things you can do to improve your home’s value and energy efficiency: New windows, insulation, passive or active solar improvements, heating and air conditioning systems, appliances.  Now needless to say $8,000 won’t cover all these things.  So the borrowers needs to determine what things they want to do and how much it will cost.

Prior to settlement the borrower submits a home improvement energy package and the costs to the lender.  Then a HERS  (Home Energy Rating System) energy rater has to inspect the property to determine whether the cost savings over the life of the loan will be greater than the loan amount.  The buyer, seller, lender or agent can pay for the cost for the inspection.  Once the rating assessment has been done and a satisfactory rating has been determined, the lender can escrow the amount of money in the proposal.  All work must be completed within 90 days. Most lenders don’t even know about this loan or if they do they don’t offer it.  Don’t ask me why.  So I was very happy when I found a wonderful loan officer at PMG Mortgage who made it his business to research the loan and convince his company to offer it to borrowers. Vince Coyle  is ready and willing to work with borrowers on this loan product.

Given the low interest rates right now this loan is an excellent way to get a lot more bang for your energy efficiency buck.  Plus, after you make some of these improvements most states have some tax credits and incentives that you might be eligible for.  Here are the federal tax credits that are available now.

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Gale10

Gayle Fleming

http://www.goinggreenhomesva.com

gaylefleming48@aol.com

703-625-1358

My purpose is to serve my clients and advocate for their highest and best good, so they attain their real estate goals.

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The End is Near and In With the Old and Out With the New

TAX CREDITS END THIS YEAR

On December 31, 2010 it’s lights out for the federal tax credits for energy-efficient windows, doors, insulation,roofs, hot water heaters and HVAC systems. So if you’ve been putting off making some energy efficient improvements to your home it’s time to stop procrastinating and as the Nike commercial says, “Just do it!”  Until December 31st you can get a tax credit of 30% of your costs up to a maximum of $1500.

Now if you want to really trick out your house with solar panels, residential wind turbines or geothermal heating there is no upper limit to what you can spend to get a 30% tax credit. And this credit is in effect until December 31, 2016.  This link will tell you what you need to know to get the tax credit.

BUT before you rush to do any of these things, have an energy audit.  Getting a tax credit for spending money you don’t need to spend is like buying something on sale that you already have and don’t need just because you’ll save money. When you have an energy audit which will cost you around $300-400, you may find out that you don’t need to spend that $20,000 on new windows–you just need to do some serious air sealing with caulking and insulation.

INSULATION

Speaking of insulation–the best and the most cost-effective insulation aren’t necessarily the same.  In a recent blog on the Green Building Advisor website, Carl Seville, an advisor who certifies green homes, discusses the downside of fiberglass insulation.  This is the insulation that most of us are familiar with and the least expensive choice for insulation. The biggest problem seems to be that it’s hard to install properly. If you’re thinking about doing some insulation before it gets really cold, you might want to check out his post.   Foam and blown in cellulose insulation are considered better choices but do cost more.

REDUCE, REUSE, RECYCLE

This is a motto we would all do well to live by to reduce the burden on our fragile planet.  But this philosophy can do more than save green trees–it can save green backs too.  So maybe you have some home improvements you want to make.  Most people would head for Home Depot or Lowes, right?  Well how about heading for ReBuild Warehouse or ReStore where you can buy new and gently used home improvement products and save more than 50%!  These are both Northern Virginia locations so if you’re reading this blog from another area, check the web to see what’s available in your area.  ReBuild Warehouse is affiliated with a company call Deconstruction, LLC, an environmental company that disassembles homes for builders or home owners doing major rebuilds or remodeling. ReStore is affiliated with and run by Habitat for Humanity

“BABY IT’S (GETTING) COLD OUTSIDE”

I have a great Energy Saver booklet to share with you.  If you email or call me with your address (if I don’t have it) I would be happy to mail it to you.  It has wonderful cost effective advise on energy savings for homes, appliances, cars, electronics, etc.

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Gale10

Gayle Fleming

http://www.goinggreenhomesva.com

gaylefleming48@aol.com

703-625-1358

My purpose is to serve my clients and advocate for their highest and best good, so they attain their real estate goals.

Marketable, Cost Effective, Eco-Friendly Home Improvements

In a volatile and wholly unpredictable real estate market, in order for a home to sell in the fastest time and for the most money it is imperative that the home shows well and is priced correctly.  Nothing new here, right?  We’ve all watched enough HGTV to know this.  Anyone with an ounce of real estate savvy understands this concept…maybe…maybe not.  How much money should you spend, and on what, to get your home ready for the market? Of course that depends on what deferred maintenance and cosmetic updates you might want or need to make.

So let me use a real life example to give you some ideas.  A few months back I listed a 1965 split level home that was solid and in good shape and that had  some upgrades in the ten years since I sold it to the owner.  However it definitely needed some freshening up to put it on the market.  A kitchen addition with an eat in area and butler’s pantry had been added when I sold the house.  But the floor was the same inexpensive vinyl that the owner had talked about replacing when I sold it to her, but never did.  The carpet in two of the bedrooms, although good quality, was stained beyond cleaning and the entire house needed to be painted.

Instead of just saying, “freshly painted, new carpet and flooring”, we wanted to add a more marketable wow factor and use sustainable products.  We wanted potential buyers to feel that the seller cared about their well-being once they moved into the home.  So we didn’t just paint the house with cheap generic off-white paint or put in the cheapest new carpet and kitchen flooring. All of these would have had toxic implications because of the dangerous volatile organic compounds (VOCs) that would no doubt be found in them.  Here’s what we used instead.

Low VOC paint: Just a few years ago buying low VOC paint meant purchasing it from a specialty store or from an online seller.  This of course, meant the paint cost substantially more.  Today, Benjamin Moore, Behr, Sherwin Williams for example  all sell low or no VOC paints.  A couple of years ago Sherwin Williams low VOC paint was about $9 more per gallon than traditional paint.  Now–it’s about the same or maybe even a few cents lower.  So why not use paint that has absolutely no paint smell and that doesn’t expose potential buyers and their families to toxins?  Sherwin Williams and Home Depot’s Yolo brand sell for about $35 per gallon–about the same as any good quality regular paint.

Marmoleum Flooring: Marmoleum is one of the best flooring choices you can make.  You may remember your grandmother’s linoleum. Marmoleum is linoleum 2.0.  It’s a completely natural flooring material made from linseed oil from the flax seed, wood pulp and resin and other natural products.  It’s anti-bacterial, anti-microbial and has is non-allergenic.  It cleans easily, resists stains and burns and comes in beautiful colors and patterns.  And it’s much cheaper than, say ceramic tile.  Ceramic tile can cost between $5 and $15 per square foot plus $6-8 per square foot installation.  Marmoleum costs between $5.50 and $7.50 per square foot and around $2.50 per square foot for installation.

P.E.T Recycled Carpet: This carpet is made from the millions of plastic bottles that the world uses.  It’s naturally stain resistant and doesn’t off gas. It’s unbelievably durable and long-lasting.  And, it’s plush and beautiful. A medium grade regular carpet costs about $2.75 per square foot.  P.E.T costs $3.25.  Installation for either is $6 per yard.

The cost to use these materials is not much more, or is equal too using non-sustainable products. But the marketing potential is huge.  Even when buyers aren’t totally knowledgeable about these products, they are intrigued and appreciative.  The house in this example had a contract within 2 weeks.  There were minimal negotiations or counter offers and the seller will net exactly what she expected. Here are some photos from the house.

If I Want a Green(er) Home Where Do I Start?

There are no national standards for what a “green” home really is.  The USGBC (United States Green Building Council) has the most recognized green building and retrofitting/remodeling  standards in the country.   But there are others—all with different standards.  There’s the National Association of Home Builders (NAHB), Build It Green and Built Green (yes, different organizations).  Then there are local standards such as Arlington, Virginia’s Green Home Choice Program.  Well you get the picture–whose standards do you use.  But here’s the thing—right now, in the Washington Metro area where I do business, there just aren’t a lot of new homes being built to any particular “green” standards.  Many builders are at least building all new homes to EnergyStar standards.  But as I said last week, energy efficiency alone does not a “green” home make.  And with the exception of USGBC, most of these ratings are for new construction.

So most of my clients are just trying to figure out what things they should do to upgrade and retrofit their older existing homes—either the one they’re buying or the one they’re selling—to make them more eco-friendly.  What is the first thing you should do?  Well I believe reducing your energy consumption is one of the most important and cost effective things to do first.  This isn’t necessarily sexy like putting in cork or bamboo floors or ice stone countertops. But it will have a measurable effect on reducing your impact on dwindling and non-renewable resources as well as significantly reducing utility bills.  Even if your home is only ten years old, it probably pretty energy inefficient.

First, insulate. I know—BOOOORING.  Oh well—so use the money you save on utility bills to buy an Ipad or something.  The cost of heating and cooling a home is 50-60 % of the total energy bill.  A few hundred dollars spent on insulation alone can cut a home’s energy bill by up to 20% per year.  There are many types of insulation and I’m not going to discuss them here.  But there are environmental concerns  to some degree for most of them.  So check out this link that discusses the pros and cons.  Some of the cons do have indoor air quality issues.  I will tell you that my favorite insulation is made from blue jeans. It’s the ultimate in reduce (get rid of some of your 10 pairs of jeans), reuse, and recycle thinking.

Second, air seal–also not exciting.  But like insulation, air sealing stops you from paying to heat and cool the outside of  your home. You can find many leaks simply by feeling the air coming in around doors and windows.  However, many leaks that come from spaces holes in attics, basements and crawl spaces.  These can be harder to find and a much bigger energy waster.  You might consider having a professional energy audit.  Energy auditors use equipment, such as infrared cameras and blower doors,  designed to suss out all the leaks in your house.  Some state energy departments have programs that are free or for a nominal fee, will do an energy rating on your home.

Oh, and by the way– there’s a 30% federal tax credit (up to $1500) on energy efficiency purchases until December 31, 2010. So this is the year to give that home you’re buying or selling, an energy makeover.

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Gale10

Gayle Fleming

http://www.goinggreenhomesva.com

gaylefleming48@aol.com

703-625-1358

My purpose is to serve my clients and advocate for their highest and best good, so they attain their real estate goals.

If It’s a “Green” Home, Can I Afford It–And What is a “Green” Home Anyway?

So you’re thinking about buying a green home. What does that mean, actually?  Does it mean buying a really big expensive home with “green” features?  Does it mean buying a really small home with a tiny ecological footprint?  Does it mean solar panels and a wind turbine in your back yard?   Does it mean you’re being a hypocrite if you don’t use rainwater barrels and stop driving your car?  Does it mean spending a lot more money than you ever would for a regular house?  “Forget it.  I’ll just buy a regular house.  It’s all to complicated, expensive and politically correct for me to figure out,” you might decide.

Or, you decide to sell your home that needs some work to get it on the market anyway.  So you decide to do all green upgrades.  Well, what does that mean exactly?  Do you have to replace your 5-year-old hot water heater with a tankless one?  Do you have to install all new windows that are triple paned and very expensive? Do you need to replace your oh, so ordinary hardwood floors, with bamboo?  Do you have to invest in solar panels to say your house is energy efficient? Will you recoup the investment?  “You know what, I’m just going to do the old standard stuff—paint, carpet, replace a couple of appliances and be done with it,” you might think.

NO, NO, NO and more NOs to all of these questions.  The myths about what a green home is, and how much it costs are many.  So I’m going to tackle some of the myths in my next few blogs and suggest some articles along the way.

The biggest myth is that buying a green home means buying a home that is many, many thousands of dollars more expensive than a regular home.  ­­First, there are nuances to what a green home actually is and that, in and of itself, is confusing.  Unfortunately green can be in the eye of the beholder.  Most new homes calling themselves green really just have some green features.  Until there are nationally agreed upon standards, what’s green will remain open to interpretation.

Buying a home with better insulation, a more tightly sealed envelope and EnergyStar rated appliances, HVAC systems and windows, does usually add a modest premium to the cost of the home.  But what is ultimately saved in energy costs and energy use, more than makes up for the additional premium.  But these are green features and do not give the builder the right to call the home a green home.  In fact, some new evidence is showing that homes that are tightly sealed but that still have VOC (volatile organic compounds) in cabinets,  carpet sealants, hardwood floor finishes, paint, etc—may be causing damage to the health of the home’s inhabitants!

There are some really great reasons to consider using sustainable standards when you buy or sell a home.  So, the bottom line is—buy or sell your home with an expert—someone who can guide you, advocate for you and protect you from greenwashing.  That would be ME–your EcoBroker certified, NAR Green designated Realtor.

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Gale10

Gayle Fleming

http://www.goinggreenhomesva.com

gaylefleming48@aol.com

703-625-1358

My purpose is to serve my clients and advocate for their highest and best good, so they attain their real estate goals.

What’s in a Floor?

If you’re planning to make some flooring changes in your home you can do it using sustainable, earth friendly and IAQ* safe products.  I’d say hardwood floors are  the main level flooring choice these days.  Certainly the majority of my clients want hardwood floors in the homes they buy or want to install them.  They’re not just beautiful and easy to keep clean, but hardwood floors greatly reduce allergens if they’re not finished or stained with toxic chemicals. If anyone in your home has asthma or other allergies, hardwood floors will go a long way towards improving their quality of life.

Many buyers want to know when they purchase an older home that is carpeted, whether there are hardwoods underneath. Recently I listed an older townhouse for sale and the seller was going to replace the carpet that had been there since she purchased it.  When the carpet was pulled up absolutely beautiful hardwood floors were revealed that didn’t even need to be refinished. That was great.  But what if the floors need to be stripped, sanded and refinished?

If the floors need to be refinished, find a company that uses low or no-VOC finishing products. These finishes will not leave highly toxic fumes circulating in your home for months. Osmo is one brand of floor finishes and stains that Universal Floors, a DC metro area hardwood flooring company uses.  CCI  Wood Floor Specialists is a small Virginia company whose owner, Jimmy Stallings, only uses VOC compliant products when he finishes floors. The Green Home Guide has a lot of information on hardwood floor finishes.

If you are installing hardwood floors you should look for FSC certified wood floors. The Forest Stewardship Council is an organization that promotes responsible forest stewardship to reduce the worldwide destruction of CO2 life giving forests.  Look for this symbol.

Reclaimed wood is another way to install beautiful hardwood floors with minimal environmental impact.  This is the ultimate repurposing. Its previous life may have been in a North Carolina tobacco barn or railroad trestles in the midwest.  This wood is generally more expensive because reclaiming and milling it adds to the labor costs. It can have really unique qualities and looks that for some, may be worth the cost. As always, be careful on sourcing reclaimed wood to make sure the company is not greenwashing.

Illegal, unsustainable and unmanaged wood (tree) harvesting is destroying large quantities of the world’s forests in places were the ecological balance of nature is being seriously compromised such as Indonesia and the Amazon.  China, which makes most of the wood products used in the United States, is scouring the world buying up wood because deforestation in China is a huge problem. The World Wildlife Fund reports on the global impact of deforestation.

*Indoor Air Quality


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Gale10

Gayle Fleming

http://www.goinggreenhomesva.com

gaylefleming48@aol.com

703-625-1358

My purpose is to serve my clients and advocate for their highest and best good, so they attain their real estate goals.