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2010-01-29 16:23:28

Cash for Caulkers


At a Northern Virginia Home Depot, President Barack Obama sent a message to Congress – “Home insulation is sexy.”
It saves money, but what it also does is stimulate home improvement, which in turn increases retail purchases and brings jobs.
The President is campaigning for a new $150 billion spending plan to provide tax breaks for homeowners to retrofit their homes with energy-efficient insulation, new energy-efficient heating and cooling systems and appliances, and sealing leaks around doors, windows, siding, and roofing. 
The money will come from the $700 billion allotted for TARP and other programs, from funds that have already been repaid by banks. Also included in the stimulus are small business tax cuts and funds for highway and bridge construction.
The success of the “cash for clunkers” program in the summer of 2009 is the inspiration for the new program’s nickname – “cash for caulkers.”
“Here’s what’s sexy about it,” said the President. “It saves money.”
While the program is still in the talking stages, it’s anticipated that homeowners will receive up to $12,000 in rebates for the retrofits. How homeowners will apply for the rebates is yet to be determined, or if the rebates can be used in conjunction with other government incentives such as Conventional (loans that can be sold to Fannie Mae and Freddie Mac) FHA and VA (loans that are insured by the government) energy efficient loans, or FHA203-K home improvement loans.
For example, a conventional EEM allows the borrower to qualify for a larger mortgage based on the amount of estimated energy savings. FHA and VA energy-efficient mortgages are insured by the government, and allow lenders to add 100% of the cost of energy efficient improvements, as long as they don’t exceed $4,000 or 5% of the home’s value (FHA) or $3,000 to $6,000 (VA.)  
The FHA 203K loan program is designed for purchase loans and home improvement loans that focus on rehabilitating and repairing single-family homes as part of the Community Reinvestment Act. The borrower must make a minimum of $5,000 worth of improvements which can include but are not limited to energy efficiency.
Currently, borrowers can take advantage of the first-time home buyer tax credit extension that expires in April 2010, for a rebate of up to $8,000 for qualifying first-timers and $6,500 for repeat buyers. They can also qualify for a conventional EEM or FHA 203-K to improve the home.
If Congress passes a third program for home improvement, now could be the best time ever to buy an older home, especially one in need of some TLC.

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