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Category: Home Energy Cost

  • Don’t Overlook This Hidden Cost of Homeownership: Energy Bills

    When you’re house hunting, it’s easy to get wrapped up in the obvious numbers: list price, down payment, and mortgage rates. But while you’re crunching those numbers, there’s another monthly cost quietly waiting to join the party—your home energy bill.

    Heating, cooling, electricity, and water can add hundreds of dollars a month to your budget. And if you don’t factor them in before you buy, even an affordable mortgage could suddenly feel like a financial burden.

    So, before you fall in love with that picture-perfect house, here’s what to keep in mind about home energy costs.

    1. Size Matters—A Lot

    A sprawling home might give you more breathing room, but it also means more square footage to heat and cool. Larger homes often come with higher energy costs simply because of the extra space. On the flip side, a smaller, well-designed home may help you keep utility bills more manageable.

    2. Age and Efficiency of the Home

    Older homes can be charming, but they sometimes come with outdated insulation, drafty windows, and older HVAC systems. That vintage charm could mean sky-high bills in the winter or summer. Look for upgrades like:

    • Double- or triple-pane windows
    • Updated insulation in walls and attics
    • Modern heating and cooling systems with high energy efficiency ratings

    3. Appliances and Systems

    From the furnace to the fridge, appliances make up a big slice of your energy bill. Check if the home includes ENERGY STAR®-rated appliances or newer models designed to use less electricity and water. An outdated water heater or refrigerator could quietly drain your wallet month after month.

    4. Climate and Location

    Where you live plays a huge role in energy costs. A home in the Midwest might have hefty heating bills during long winters, while a home in the South could rack up cooling costs year-round. Consider not just the cost of the house, but the climate you’ll be living in—and how much comfort will cost.

    5. Smart Home Technology

    More and more homes come equipped with smart thermostats, energy-efficient lighting, and even solar panels. These upgrades can make a noticeable dent in monthly utility costs. A home with built-in energy-saving tech could save you money over time, even if the upfront purchase price is higher.

    6. Utility Rates in the Area

    Not all cities (or even neighborhoods) have the same utility rates. Electric and water providers set their own pricing, and those costs can add up quickly. Do a little research on the average utility bills in the area before you commit—you may be surprised at the difference from one zip code to another.

    Bottom Line: Look Beyond the Mortgage

    When buying a home, the monthly mortgage is just part of the financial picture. Energy bills are the hidden cost that can make or break your budget. By paying attention to the size, efficiency, appliances, and location of a home, you’ll be better prepared for the true monthly costs of ownership.

    Because a dream home shouldn’t come with nightmare utility bills.

    Contact Gulf Life Real Estate and start working with a professional who can help you navigate all aspects of the home buying process!

  • Save Money (and the Planet): Energy Efficient Mortgages

    Are you a buyer with your eyes on a charming older house or a bargain fixer-upper?

    As you’re researching what it will take to buy the property, you’ll likely come across some hefty costs for updates to replace the outdated furnace and drafty single-pane windows. And that might leave you thinking you can’t afford the home after all—especially if those costs come on top of making your mortgage payments.

    We’ve got some good news on a type of mortgage you probably never heard of. An Energy Efficient Mortgage, or EEM, allows you to make energy upgrades to your home and roll those costs into your mortgage loan. Here’s what you need to know to determine if an EEM is right for you.

    What is an Energy Efficient Mortgage?
    An EEM, also known as a green mortgage, allows homebuyers to purchase (or homeowners to refinance) homes that meet specific efficiency standards. The cost of the energy upgrades then gets included in the financing of the mortgages.

    And even though EEM has been around for a long time, few homebuyers know it exists. They’re not talked about much in the industry, but these loans are great for energy-efficient upgrades.

    EEMs are offered through the Federal Housing Administration, the U.S. Department of Veterans Affairs, and conventional loans via approved lenders. The maximum amount of money that can be wrapped into your mortgage depends on your loan type and how much you’ll save on utilities with the upgrades.

    How do you qualify for an EEM?
    An EEM requires a bit more legwork than a traditional mortgage. Borrowers first need to qualify for a loan and then get a professional home energy audit to determine whether the improvements are cost-effective.

    Energy auditors use the Home Energy Rating System, a nationally recognized system for inspecting and measuring a home’s energy performance. The HERS scoring scale runs from 0 to 150. The lower the number, the more energy-efficient the home is. So for example, a score of 100 represents a standard home; a home rated at 70 is 30% more energy-efficient than a typical home.

    Auditors assess which improvements would reduce energy consumption and estimate how much the upgrades save monthly.

    Once the energy auditor makes recommendations, it’s up to the lender—not the homebuyer—to decide which upgrades will make the cut.

    The financed portion of the cost of the energy-efficient improvements must be less than the value of the energy saved over the estimated useful life of the improvements. Note that an audit typically ranges from $300 to $800. That cost can be added to the loan, or the borrower can pay out of pocket.

     

    What types of energy-efficient improvements are allowed?

    In a nutshell, the upgrades must be cost-effective and greatly improve energy efficiency.

    Think of improvements such as high-efficiency doors and windows, new furnaces or water heaters, insulation, solar panels, or energy-efficient appliances.

    The FHA, VA, and other approved lenders each have their specific guidelines. But some other standard energy-efficient upgrades include replacing a cooling system and integrating solar, geothermal, and wind technologies. You can also generally add in fixing or replacing a chimney and installing smart thermostats.

    How much money can be rolled into an EEM?
    Each type of EEM has limits for the value of energy-saving upgrades that can be added to the base loan amount of the mortgage.

    Here’s a brief breakdown of each:

    • Conventional: Freddie Mac and Fannie Mae allow you to borrow as much as 15% of the home’s appraised loan-to-value to make energy-efficient improvements. Once you close on this loan, you’ll have 180 days to complete the upgrades.
    • FHA: Borrowers can finance up to 5% of the property value (capped at $8,000), 115% of the median price of single-family dwellings in your area, or 150% of the conforming Freddie Mac limit. The upgrades must be completed within 90 days of mortgage closing.
    • VA: Typically, there is a limit of $6,000 for energy efficiency improvements on top of the VA loan for a home purchase or refinance. The VA criteria focus is on more permanent energy upgrades, so things like appliances or vinyl siding won’t fit the bill. The new energy upgrades must be completed within six months of closing.

    Is an EEM worth it?
    Whether or not an EEM is worth the extra effort all comes down to how much it will benefit you, your bottom line, and the environment. An EEM requires a professional energy assessment, which comes with an added cost. Plus, you’ll spend some extra time during the underwriting process before loan approval.

    But in the pro column, you could qualify for a larger loan amount, which will help you afford upgrades to your property. And if done right, you’ll save money on your utility bills in the long run. Another bonus: If you ever sell, having an energy-efficient home increases your home’s potential resale value.

  • Solar Panels: Is Your House a Candidate?

    If you’re thinking about going solar, you’re probably wondering: Is solar cost-effective? Is my roof suitable for solar panels? Will solar energy generate enough electricity to power my home? Who makes the best solar panels?  But first, it’s important to explore if solar panels for your home make sense. Here are some key questions to ask yourself if you are interested in buying or leasing a solar energy system to make sure your home is best suited for making power with solar panels.

    Do I Have the Right Roof? The proper installation of solar panels will depend on the type of roof you have. The ideal roof materials are composite, asphalt type shingles, tiles made of concrete or a metal roof. You can still have solar panels installed if you have other materials like tile, wood, or clay, as long as they’re sturdy. It is also important to consider the amount of sunlight you get per day.  South, east or west-facing roofs are the most desirable. The roof should also be free of any obstructions such as vents, antennas, chimneys, or even wooded areas in the parts where your panels are being installed.

    Will it Help Save Money? Having solar panels installed won’t necessarily mean you don’t have to pay an energy bill, but it will certainly lower your monthly costs. Typically, solar panels will decrease your energy bill, but you are also eligible for a tax deduction.  The federal solar tax credit, also known as the investment tax credit, allows you to deduct 26 percent of the cost of installing a solar energy system from your federal taxes.

    How Many Panels Will I Need? The square feet of suitable roof space you need to install solar panels will vary by the size of the solar system you need. This, in turn, will vary with the amount of power you consume and the utility company. You can work out how many solar panels you need for your home using a solar panel calculator.

    What if my Roof isn’t right for Solar Panels? There are other solar options available if your roof isn’t ideal for installing a solar panel system, including:

    • Installing a ground-mounted solar panel system elsewhere on your property
    • Building a solar panel carport to simultaneously power your house and provide shade for your car
    • Invest in a share of a solar garden, which offers you the benefits of rooftop solar panels sourced from a large solar panel array in your community

    All of this could sum up to a great choice for the environment and an even better choice for your wallet!

  • Home Energy Cost: The Real Deal on Big Bills That Come With a House

    Home energy cost is not something people always think of when it comes to buying a house. But don’t get consumed by the details of finding and buying a house without considering the potential bills you’ll have to pay every month for heating, cooling and more.

    Home energy cost considerations

    Even an affordable mortgage payment could quickly tip into the pain point if your new home comes with a monthly utility outlay that you weren’t expecting. So what factors should you consider? Everything from your electric bill to your heating are part of your home energy cost.

    How to do that math:

    You might want to hire a professional to determine the home’s overall energy costs before committing to a down payment. Energy audits cost a few hundred dollars but could save you from countless headaches (and costs) down the line. Not only will they give you a good idea of what’s in store, they will also point you toward fixes you can install so you’re not facing the same bills as the previous owner. The federal government’s Energy.gov site has guidelines for home energy audits, and tips for a DIY version. If you don’t want to go that far, here are some specifics to consider:

    Heating and cooling systems

    Heating and cooling can consume 45% of a house’s energy costs. The layout of the house will be a factor in energy costs. Vents located under windows are inefficient, and some rooms may not even have vents. In colder climates, remember that heat rises. High ceilings can result in wasted energy and added heating costs every winter. In tri-level houses, the upper floors will be warmer while the ground floor will be colder.

    Consider how much alterations might cost. In-floor heating can save you up to 40% of energy costs, depending on the system. To have a professional install a hot water radiant floor heating system would cost about $6 to $15 per square foot.

    Get all the information available on the house’s furnace and air conditioner. Find out the seasonal energy efficiency rating (SEER) for the house’s air conditioning system. For gas furnaces, you need to know the Annual Fuel Utilization Ratio (AFUE). If the house’s heating and cooling systems are 10 to 15 years old, or have a SEER of less than eight, it may be necessary to replace them.

    Appliances energy costs

    Did the former owner of the house throw in some appliances as part of the package? Although this gesture may save you money in the short run, be aware that older appliances can be much less energy efficient than new ones. Inefficient appliances eat up energy and can cost you hundreds of dollars over time. Research the make and model of any used appliances and assess whether they will incur higher energy costs than if you bought new ones.

    Tax credits

    State and federal programs might offer tax credits or other deals, such as grants or discounts, if you replace older appliances or heating or cooling systems, like an aged boiler, with newer, more energy-efficient versions. Some localities offer free energy audits, too. It might be worth asking about such programs if you are looking at an older house. Maybe the efficiency ratings are low, but if you love the house, and there’s enough deals available that you could upgrade relatively painlessly, it might still be worth purchasing. The key here is knowing the facts so you can judge what your bank account can handle.

    Infrastructure

    Check features such as windows, doors, insulation and siding for efficient energy usage. You can hire a professional to use a thermal camera to see where heat escapes, or conduct a blower-door test to identify air leaks by using a large fan with an airtight skirt that blows air out the door, although those tests could prove expensive. Insulation in the attic should be thick enough to hide all of the studs. Weathering and material aging can cause problems with siding, such as cracking, rotting or cupping, so check its condition too. Leaky windows glazed with putty can be reglazed, or consider buying double-pane windows. These will run you about $600 for moderate quality or up to $800 for high quality.

    Architectural features

    Big homes mean bigger energy bills too, so consider size in relation to your ongoing energy bills when you look at homes. A big stairway in the entryway means a lot of wasted heat each time the front door opens. Beautiful cathedral ceilings can bump up energy bills too. Walls of windows can afford a lovely view, but the added sunlight can strain your air conditioning bills in the summer, while leaks will raise your heating costs in the winter.

    Energy costs: an informed decision

    Only you can decide whether a home’s energy costs are worth the selling price. Your dream home may not be so ideal if the energy bills deplete your savings. But it could be worth investing some money in upgrading the house’s systems and features.