Point-of-Sale Energy Efficient Financing
It’s no secret that finances are often a barrier to home performance upgrades for homeowners. This is precisely why programs like the PowerSaver loan program are helpful as they work with contractors and equipment installers interested in offering energy efficient financing at the point of sale.
So what is the PowerSaver loan?
Choose from Three Loan Products
There are three PowerSaver products for a variety of projects, from small energy efficiency upgrades to more extensive HVAC system repairs/replacement and renewable energy systems. Homeowners can also include certain non-energy-related improvements.
- PowerSaver Home Energy Upgrade—Up to $7,500: This type of loan is for smaller projects such as insulation, air and duct sealing, water heating, and upgrading or replacing heating and cooling equipment. This is an unsecured consumer loan—no home appraisal is required.
- PowerSaver Second Mortgage—Up to $25,000: Larger retrofit projects that may include energy efficiency, solar PV, solar hot water, geothermal, or other renewable energy projects can be financed with this type of loan.
- PowerSaver Energy Rehab—First mortgage up to FHA loan limits: This loan is for home purchase or refinance. It can be used for energy efficiency improvements as part of an FHA 203(k) rehabilitation first mortgage when purchasing a home or refinancing an existing mortgage. For loan limits visit, https://entp.hud.gov/idapp/html/hicostlook.cfm.
Andrew Isaacs is a Senior Finance Specialist with SRA International (SRA) and serves as the DOE Home Performance with Energy Star (HPwES) Finance Specialist. SRA is one of three companies working as part of the PowerSaver Marketing team in partnership with NREL and others to promote and develop long-term delivery channels of PowerSaver loans. For more information about these loans, we talked with Isaacs.
Q&A with Andrew Isaacs
Home Energy: Why should a homeowner choose a PowerSaver loan?
Andrew Isaacs: There are a few reasons why, including:
- Closing costs and origination fees are reduced by some lenders due to PowerSaver grant funds available through May of 2015;
- PowerSaver offers long-term fixed rate financing with no prepayment penalties. Longer terms can mean lower monthly payments for consumers. Consumers can elect to do larger jobs or upgrade to even higher energy efficient equipment or can add additional energy efficient measures to their home remodel or refinance; and
For the refinance [203(k)], the loan has non-energy advantages and there are two types:
- The Standard 203(k) loan is for major improvements. For the Standard 203(k), the home improvement project must cost a minimum of $5,000 and include $3,500 in energy upgrades. There is no limit on the total improvement cost. A HUD 203(k) consultant is required for oversight of home improvements.
- The Streamlined 203(k) loan is for minor home improvements. There is no minimum requirement for the home improvement cost, but the project must not exceed $35,000 in upgrade projects. A HUD consultant is not required for oversight of home improvements.
HE: What makes the PowerSaver loans different from other loan types or programs?
AI: PowerSaver is a HUD insured program and offers three distinct financing types that can be utilized depending upon the size and scope of the energy upgrades. PowerSaver contractors must also sign up and are vetted by participating lenders for quality and certification. PowerSaver also has program guidelines in place that contractors must follow.
HE: How have you seen or heard of contractors effectively working with homeowners with PowerSaver loans?
AI: Yes. There are several contractors working with participating lenders to offer PowerSaver. The lenders are very experienced and make the process easy for contractors to participate and to sign up to offer PowerSaver. BPI is partnering with three PowerSaver lenders to offer PowerSaver financing to their GoldStar Contractors. Every contractor should offer a financing option to their customers. Financing can not only improve closing rates but can also allow consumers the option of paying overtime and including more energy efficient measures in their job meaning greater savings and more comfort. Contractors are also able to easily offer PowerSaver along with utility and or manufacturer rebates when available to providing additional benefits to their customers.
HE: Are there materials easily available for contractors to share with their clients about this program? If so, where can they be found?
AI: Several of the lenders have websites with product information, list of eligible measures, loan calculators, and some have online applications for consumers:
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