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.

Climate Change, Energy Costs, Tax Credits & Good Real Estate News

 

Climate Change

As you can see from the title of this blog, there’s a lot to talk about in this last week of 2009.  I must admit that I am both surprised and disappointed by some of the research statistics that have been have been touted in the last few months of 2009 regarding the environment.  For example, even though 93 percent of all climate scientists conclude that the rapid rate of climate change the world is experiencing is a result of human activity, only 43 percent of Americans believe them.  I have to quote Daniel Patrick Moynihan here and say,  “everyone is entitled to their own opinions—but not their own facts.”

Only forty percent of Americans say that heating and cooling costs are very important.  Given the fact that the state of the economy is a real concern for most people, it seems incongruous to me that the majority of Americans don’t see a correlation between  energy costs and their personal finances.  Wouldn’t any sure fire way to reduce expenses be a positive for a person or family’s bottom line?

Energy Improvment Tax Credits

The federal government thinks energy costs and climate change are important enough to offer some pretty good incentives to consumers/taxpayers.  You can get a tax credit of up to $1,500 for energy efficient home improvements that you make during 2009 and 2010.  So if you buy Energy Star appliances, water heaters, HVAC systems, windows, doors or roofs you are probably eligible for this tax credit.  This is a onetime credit and can be used in 2009 or 2010.  Be sure to go to the Energy Star tax credit page to get details for receiving the credit. 

But  In spite of this great incentive to consume less energy and save money, a new survey finds that when asked “if someone gave you $10,000 for home improvements, how would you spend it?” A majority said they would pick ways to make their homes look better, rather than burn less energy.  Most of the 508 people surveyed said their energy costs would have to rise by $1,500 per year for them to see these costs as “very important”.  Hmmmmm?

Winterize Your Home

But if you are concerned about saving energy and money and even if major purchases aren’t in your budget, there are many small things you can do to save money and energy this winter. According to the US Dept. of Energy drafts cause 5-30 % of the wasted energy in a home. You can simply roll a towel and use it to stop the draft. If you want to be a little fancier you can buy or make a draft snake.   Buy a window insulation kit at the hardware store.  Make sure to have your furnace serviced twice a year and change your furnace filters once a month during the heating season.  Here are seventeen more tips  for winterizing your home. 

 Good Real Estate News

The economy is showing signs of improvement, jobless claims are way down and the sales of existing homes has risen by 44% year over year from this time last November.  In the Northeast sales have risen 57%!  This is good news. Banks are lending and the first time and move up buyer tax credits have been extended until April 30, 2010. Settlement doesn’t have to take place until June 30, 2010.  A single person can earn up to $125,000 and as long as he/she hasn’t owned a home in the last 3 years, they’re eligible for the first time home buyer tax credit of $8,000. A couple can earn $225,000. Move up buyers who have lived in their home for five out of the last eight years are eligible for a $6,500 tax credit with the same income limits.

Happy New Year!

Gayle

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Gale10

www.goinggreenhomesva.com

www.facebook.com/gayle.fleming

www.twitter.com/ecogayle

          703-625-1358

Fed Tax Credits Stimulate Your Bank Account Save Money and Energy

So you are feeling compelled to do something about the fact that your home heats and air conditions the outside almost as well as it heats and air conditions the inside–maybe better.  Too much money being wasted and too many CO2 emissions being created.  Rather than trying to guess where the leaks in your home are, you’ve had a professional energy auditor rate your home and advise you on what you need to do. 

Now it’s time to act.  Some fixes may be as simple and inexpensive as caulking or weatherstripping.  However if the fix requires the purchase of windows, a furnace or a/c unit, for example, there are some great federal and in some cases, state tax incentives that will help offset the cost.  President Obama’s stimulus package isn’t just for the fat cats.  There is something in it for you and me.   There is a 30% tax credit that can be used to make energy efficient home improvements for things such as insulation, roofs, doors, furnaces, hot water heaters, etc.  Now this is a one time tax credit with a maximum of $1,500. 

 The credit can only be claimed once in either 2009 or 2010.   So if,  for instance, you buy a $3,000 A/C unit in 2009, your tax credit would be $900.  Then you spend $2,000 on insulation which will give you a tax credit of $600.  These two improvements will max out your tax credit of $1,500.  So even if you also have new windows installed you can only claim the credit up to the $1500. And at least for now it’s a one time credit.  That could change of course as the Obama administration pushes for more ways for the country to conserve energy.  The EnergyStarwebsite explains in more detail which improvements qualify for the tax credit.  Be sure to bookmark the EnergyStar link because it has all the guidelines and some efficiency factors have changed.

Now if you really get adventurous and are thinking about geothermal or solar heat, the incentives really heat up, pun intended.  Either one or a combination of both of these options could reduce your energy costs by up to 70 percent.  They are relatively expensive to install but over years they more than pay for themselves.  The tax credit for these is 30% tax credit  with NO  limit on what you spend. The credit can be claimed until 2016.  So if you spend $10,000 on a solar system, for example, your credit is $3,000. 

Some state governments have incentives as well, so check with your state’s  Department of Taxation.  In Virginia , of instance, from October 9th through October 12th their will be no sales tax on certain energy efficient home improvements. Sales tax in Virginia is 5%.  This is modest but many states offer even more incentives.  Maryland as an array of state AND local (county) incentives for residents.  Do your homework before you purchase much needed energy saving products and services and take advantage of everything that’s available to save you money.

Be sure to watch the cute, short video on geothermal heating and cooling.