Senate Cents: A Financial Wellness Blog

As the crisp autumn air starts to settle in and the dropping temperatures signal the approach of winter, now is the perfect time to boost the energy efficiency of your home. While these improvements can lead to long-term savings, it's essential to ensure you can afford the upgrades without straining your finances.

Many homeowners aspire to upgrade their homes but often worry about lacking the necessary funds. However, by leveraging the equity you've built in your home, you can access the financing needed to make these essential improvements in your home—investments that will pay off for years to come.

Use Your Home’s Equity for an Energy-Efficient Fall

As you continue to make your monthly mortgage payments, you're steadily building equity in your home. In simple terms, equity is the difference between what you owe on your house and its current market value. As this gap widens, you can leverage that equity to your advantage. Whether it’s consolidating debt or covering significant expenses, a home equity loan or a home equity line of credit (HELOC) can be a valuable financial tool.

This fall, consider borrowing from the equity you’ve built to make key home improvements that focus on sustainability and energy efficiency. With winter fast approaching, here are some upgrades to consider:

1. Add insulation and seal air leaks

Heating and cooling your home require significant energy. If you're losing climate-controlled air through the walls, you'll need more energy and money to keep your home cozy. Sealing your home can yield an average savings of 15% on heating and cooling expenses.

2. Upgrade to a tankless water heater

Tankless water heaters create on-demand, heated water instead of storing warmed water in a traditional storage vessel. Households that require high volumes of hot water, around 86 gallons per day, can see energy savings of 8% to 14%. Homes that require less, up to only 41 gallons per day, perform even better, with a potential for 24% to 34% energy savings.

3. Set up a programmable thermostat

These thermostats allow you to schedule your heating and cooling cycles. Set times and temperatures for when you wake up, leave for work, come home and head to bed.

A smart thermostat gives you additional flexibility, learning about your schedule over time, adjusting to your needs and giving you added functionality through an app. Some electric companies offer customers huge discounts or even free smart thermostats. On average, you can expect to save 8% on heating and cooling costs throughout the year with them.

4. Switch to WaterSense-certified plumbing fixtures

Shower heads and faucets with the WaterSense seal meet the U.S. Environmental Protection Agency's criteria for water efficiency. EPA research is clear — upgrading your shower head can save four gallons of water per shower. A WaterSense faucet can preserve an additional 700 gallons per year.

Best of all, products designated with these seals have been scientifically and consumer-tested for performance. So you'll always enjoy the water pressure and coverage of a great shower.

5. Install a geothermal heat pump

Also known as a ground source heat pump, a geothermal system transfers heat between your home and the earth. The system typically provides heating, cooling, humidity control and water heating, and you can install one in any climate.

The energy savings can be massive. Geothermal heat pumps use 70% to 80% less electricity than standard HVAC systems.

6. Swap your appliances for Energy Star-approved models

Technological advancements have yielded an ever-improving array of appliances in recent years. Energy-efficient dishwashers and washing machines use minimal water while offering a quieter wash cycle, better rinsing and improved drying. Energy Star refrigerators provide enhanced insulation, cooling and airflow. When shopping for appliances, check the EnergyGuide tags to see how much electricity each model consumes annually.

7. Mount solar panels

When you produce electricity with solar panels, you generate clean energy on location. You also consume less from your utility company, which may produce theirs by burning fossil fuels. Need extra incentive? Solar panels can boost property values by 4.1% on average.

Key Reasons to Boost Your Home’s Energy Efficiency

Even with the upfront costs, eco-friendly upgrades can translate into real value for your home, whether you plan to stay in it or put it on the market. Consider these significant advantages of going green:

• Cost Savings: Depending on the upgrades you choose, you might plug up costly leaks, get appliances that require less energy, or use more efficient heating and cooling systems. With smart upgrades, you can save significantly on your utility bills every month.
• Decreased Environmental Impact: Energy-efficient upgrades often require fewer resources, use them more strategically, and minimize waste. You can reduce your carbon footprint without drastically changing your lifestyle.
• Greater Energy Independence: By producing, storing, and using your own electricity, you'll be less dependent on utility companies. Consequently, you'll stress less over price hikes and power outages.
• Increased Property Value: On average, energy-efficient features boost home values by $8,246, and they can make your home more attractive to buyers. About 90% of purchasers report they would gladly pay more to buy an energy-efficient home.
• Financial Incentives: Enjoy special financing programs, cash rebates, or tax credits for certain eco-friendly home upgrades. Depending on where you live, you may qualify for a variety of federal and state financial incentives.

Paying for Sustainable Home Upgrades: How a HELOC Can Help

Many projects for bringing your home into the environmentally conscious 21st century involve the costs of adapting or replacing entire systems. You know they'll pay off eventually, but you also have to finance them now.

Instead of turning toward credit cards or a personal loan, a home equity line of credit (HELOC) can be an ideal financial solution. A HELOC offers you a revolving line of credit — similar to a credit card but at an interest rate that tends to be lower than unsecured borrowing options. With your home as the collateral, you can often find more competitive rates than traditional borrowing options.

HELOCs are a popular choice for financing renovations because as you upgrade your home, you're often facing inexact costs and multiple bills arriving over time. Tapping a line of credit can give you the flexibility you need.

If you are taking on a renovation project a USSFCU HELOC can help you right now. And our home equity specialists are here to help guide you.

Learn more

Article content is provided for information purposes only.