We all know that investing in energy-saving home improvements will make our home more comfortable, will save us money and improve the home’s market value. But, for most of us getting that up front cash can keep us from doing something we know is smart.
That’s why I was ecstatic to see the FHA finally announce the pilot program for the insanely affordable, easy-to-get PowerSaver loan. I can’t overstate how great this loan is for many homeowners, especially those who can’t get a home equity loan or find an affordable consumer loan.
What is PowerSaver loan?
PowerSaver lets you make the energy improvements of your choice by allowing you to borrow up to $25,000 for up to 20 years for any eligible improvements.
The FHA is backing this low-cost financing to help you make the important energy saving improvements you’ve been putting off. Eighteen national, regional and local lenders are partnering with the FHA two-year pilot program. Check out the list of participating lenders below.
I recommend getting a home energy audit to determine which improvements will give you the biggest bang for the buck. If you’re smart and combine this loan with other incentives like rebates and tax credits, the 20-year loan term could make your monthly payment actually less than your energy savings. It’s like free money.
No matter what, you’ll still have the coziest house on the block and you won’t be stealing energy from your children’s future.
What can you use the PowerSaver loan for?
Examples of eligible improvements include insulation, duct sealing, energy efficient doors and windows, energy efficient HVAC systems and water heaters, solar panels and geothermal systems. If you were hesitating on replacing that old furnace with a geothermal heat pump, now’s the time to jump on it.
So what’s the deal?
The loan is available to anyone with a 660 credit score or higher and a debt to income ratio up to 45%. The interest rate is between 5% - 7%. It’d be tough for you to find a better deal than this.
One challenge is that the combined loan-to-value ratio for all loans on a home, including the PowerSaver loan, cannot exceed 100 percent. Which means that you’ll need $25,000 equity in your home. That will put this loan out of reach for folks whose homes are under water.
Remember, this is a pilot program and rates are currently low. If you qualify, you should grab this opportunity before it’s too late.
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FHA PowerSaver Approved Lenders
- Admirals Bank
- AFC First Financial Corporation
- Bank of Colorado
- City of Boise, Idaho
- Energy Finance Solutions
- Enterprise Cascadia
- HomeStreet Bank
- Neighbor’s Financial Corporation
- Paramount Equity Mortgage, Inc.
- Quicken Loans
- SOFCU Community Credit Union
- Stonegate Mortgage Corporation
- Sun West Mortgage Company, Inc.
- The Bank at Broadmoor
- University of Virginia Community Credit Union, Inc.
- Viewtech Financial Services, Inc.
- WinTrust Mortgage
- W. J. Bradley Mortgage Capital Corporation
Matt Grocoff is host of Greenovation.TV, a contributor to The Environment Report on Public Radio and the green renovation expert for Old House Web. His home was honored as one of USA Today’s “Best Green Homes of 2010″. He has been featured in hundreds of publications and news shows including USA TODAY, Washington Post, Detroit Free Press, Miami Herald, Preservation Magazine, Solar Today, Fox Business News, Huffington Post and more. Join him on Twitter and Facebook