Buying a home requires a fairly large financial investment and most people need to generate a mortgage to do so. Fortunately, the FHA has a program available that will help prospective homeowners cut their house payments by making energy efficiency improvements to their home.
The 203K loan allows home buyers to finance home energy efficiency improvements. Doing so lowers monthly costs because utilities can consume a large share of the cost of owning a home. The types of improvements allowable under this program include:
HVAC Equipment
Heating and cooling homes constitutes about half the energy that a family uses throughout the year. If the existing heating and cooling system is more than 10 years old, it makes sense to finance its replacement as part of the mortgage. Energy efficiency standards for these systems have improved greatly over the last decade, and everybody wins when it takes less energy to maintain indoor comfort.
Home buyers may also benefit by taking advantage of rebates, incentives or tax credits that local utilities or jurisdictions offer for installing high efficiency systems.
Insulation
Not all existing homes have adequate insulation in the attic and walls. Folding in the cost of additional insulation in the walls and attic makes sense because insulation lowers the amount of heating and cooling the home needs.
Air Leaks
Air leaks are an especially common problem in homes that are older. Over time, caulk around windows shrinks and weatherstripping wears out. The energy audit will show exactly where the leaks are. While fixing them is neither difficult nor expensive, being able to fold the costs for sealants and their installation is a vital component to using 203K loans to improve energy efficiency.
Windows
Upgrading windows to thermal or Energy Star products can make a significant dent in the monthly utility bills. The glass in single pane windows has almost no ability to stop heat transfer, and energy efficient windows tend to be expensive. They can also quiet a home from a busy street.
Appliances
The 203K loan program lets applicants finance appliance upgrades and choosing Energy Star clothes washers, refrigerators, water heaters and dishwashers will reduce ongoing energy bills.
Remodeling
Finishing a basement falls under the 203K guidelines and it can improve the energy efficiency of a home. After framing the walls, adequate insulation in the walls and ceiling will keep the space warmer.
Prospect Mortgage encourages its clients to use a 203K loan to make their homes greener because it adds instant value to the home. A home that is demonstrably more energy efficient tends to sell faster because it costs less to live in it and an efficient home offers more comfort.
