Consumers have become more concerned about sustainability than ever before. One poll from 2019 showed that 45% of consumers are willing to pay a premium for 100% renewable energy. Of course, the number of homeowners that are willing to pay for eco-friendly home improvements that actually save money is even higher.
Demand for eco-friendly home improvements is likely to continue to rise for the foreseeable future. Many people reading this might think this is wishful thinking, but there is strong market data showing green homes are becoming more popular than ever. There is no reason to think this will change anytime soon.
If you are still skeptical, then you should pay attention to the statistic. In 2019, one poll found that 38.5% of consumers acknowledged that they had bought an eco-friendly home or eco-friendly home improvements within the past year.
Of course, many people are passionate about sustainable homes and products out of concern for the environment. On the other hand, many people want to purchase them to save money on energy.
The problem is that the upfront cost can be considerably high. This can put people in a difficult situation if they are trying to finance these improvements. The good news is that there are some low interest loans that they can take out to fund these projects or purchases.
Nevertheless, it is still a good idea to weigh all your options before committing to purchasing an eco-friendly home improvement. Some ideas that you might want to consider are listed below.
Consider the merits of paying for these improvements with cash upfront
There is always an opportunity cost associated with choosing whether or not to take out a loan. You will obviously avoid having to pay interest on a loan if you have enough cash on hand to pay for your eco-friendly home improvement outright.
On the other hand, you will take up the money that you spent on your home improvement, which might have been available for something else. You need to consider this opportunity cost when deciding whether or not to take out a loan. You might earn more from other investments, such as a business you run than you would lose from interest on your loan. In this case, it is best to take out a loan instead of using your available cash. However, it would not be prudent to take out a loan if you are simply keeping your money in a savings account that pays lower interest than the cost of your loan.
You are going to need to consider the opportunity cost carefully, even if you have enough money to pay for these expenditures with cash. Of course, most people don’t have anywhere near enough money to simply write a check for such a big investment, so a loan is their only option.
Look into green tax credits
The federal government has offered a variety of tax credits for eco-friendly purchases and home improvements over the years. Many of them have been phased out, but there are still some great tax incentives worth exploring.
The IRS currently allows taxpayers to claim a credit equivalent to either 10% of the cost of in approved energy efficient home improvement or up to $500 worth of energy expenditures during the taxable year.
You will obviously need to wait until you file your taxes before you can take advantage of the savings. However, you will still be able to benefit from them when you do. You might want to consider paying for an energy efficient home improvement near the end of the year. Then you can reclaim a portion of the cost when you get your tax return and use it to pay off a portion of your loan. This will minimize your interest expenditures.
Improve your chances of getting a low interest loan
There are a lot of things that you can do to increase your chances of getting approved for a loan as a green homeowner. These tips will also help you get a better interest rate. These guidelines include:
- Emphasizing the cost savings of the investment
- Making sure that your credit is good
- Investing in less expensive eco-friendly home improvements to keep your debt-to-income ratio low
- Offering some form of collateral to back your loan
You want to get the best rate that you can when trying to finance a home improvement. You need to follow this advice carefully.
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