Financing Options
Financing Your Home Performance with ENERGY STAR Project
Often, high initial cost is the biggest barrier to improving the energy efficiency of a home. When you are interested in making significant home energy improvements, such as a comprehensive Home Performance with ENERGY STAR project, appropriate financing can make the investment possible and affordable.
The ideal loan combines easy qualification, an attractive fixed interest rate, and a relatively long repayment term. Fixed monthly payment plans that can be offset by energy savings pay for themselves.The money that would have been spent on energy bills becomes available to make most or all of the loan payments.
Types of Loans
A consumer loan can be unsecured (based solely upon the borrower's credit) or secured (backed by something of value belonging to the borrower). In general, unsecured loans will have higher interest rates. On the other hand, secured loans tend to be more complicated and difficult to obtain, with additional fees and paperwork required. Consumer loans are usually for no more than five to seven years.
A secured loan places a lien, or hold, on an item of property to secure the payment of a debt. A mortgage, which places a lien on your home, can be a great option for financing major energy improvements, because mortgages have long terms, up to 30 years, and relatively low interest rates. Home equity loans can also be a good match, because the term is typically longer than consumer loans (up to 15 years) and the interest rate is relatively attractive. A loan can also be secured by a lien on other valuable assets, such as a car or boat.
Longer Loan Terms Are Better
The least expensive way to pay for energy improvements (or anything else, for that matter) is to pay in cash. Given the size of the typical home energy project, however, few homeowners have this option available to them. Loan terms are important because they affect the monthly principal payments for a loan.
Energy Loans in Vermont
List of Vermont lenders offering loans that can be used for energy projects (PDF).
Additional information about the Vermont State incentives and tax credits that are available can be found using the Database of State Incentives for Renewables & Efficiency.
Low-cost Energy Loans
Often, high initial cost is the biggest barrier to improving the energy efficiency of a home. When you are interested in making significant home energy improvements, such as a comprehensive Home Performance with ENERGY STAR® project, appropriate financing can make the investment possible and affordable.
NeighborWorks Alliance of Vermont has 0-3% loans to make energy improvements, install alternative energy technology, or weatherize your home.
The Save Energy Assistance Loan program offers:
- 0-3% interest rate (different HomeOwnership Centers offer different rates).
- Free project oversight and coordination.
- Flexible terms to create an affordable payment; deferred loans available to income-eligible customers.
- Rebates for up to 30% of the weatherization work performed by a Home Performance with ENERGY STAR contractor through Efficiency Vermont.
The Save Energy Assistance Loan program requires:
- Qualification for income, owner-occupancy, and other basic eligibility requirements.
- An energy audit by a Home Performance with ENERGY STAR® professional or Weatherization Assistance Program.
- Improvements must be installed by a Home Performance with ENERGY STAR® contractor.
- Other health and safety code items found in the home must be corrected as part of the loan.
To apply for the Save Energy Assistance Loan program through the NeighborWorks HomeOwnership Center, contact the housing loan fund in your region.