With increasing environmental concerns over water usage and different forms of pollution, homeowners are actively seeking ways to make their homes more efficient. Although installing energy efficiency features in your home could help conserve the environment, converting from traditional to energy efficiency can be costly. If you can save on costs while you install these features in your home, you can explore the Home Energy Renovation Opportunity (HERO) program and financing.
The HERO program is a government-funded financing program to help homeowners make their homes more energy-efficient. You will qualify for a HERO loan if you are a California resident. Additionally, you must have at least 10% equity in your home and be current on all property taxes.
With the HERO program, your home improvement program is 100% covered, and you save significantly on water and energy bills. Before you go for the HERO loan, you must establish a long-term strategy for your home. At Orange County Home Remodeling, we offer expert home-improvement services for all our clients in Orange County, CA.
An Overview of the HERO Program and Financing
The Home Energy Renovation Opportunity is a government-backed program that helps homeowners upgrade their homes. Home improvement is expensive. In addition to traditional options like home equity loans and refinancing, California residents can receive financial assistance for water- or energy-efficient projects in their homes.
With this financing program, you will not incur upfront payments. Instead, the HERO loan covers the project's full cost and labor. In return, you can pay it back over time. You can apply for the HERO loan online, which is easy. However, you must meet the residence, home ownership, and mortgage debt eligibility requirements. Additionally, you must follow the state guidelines on installing and using energy-efficient options.
Projects You Can Finance using the HERO Loan
Technology is constantly changing, and the need to keep up may create a necessity for home and property improvement. However, the Home Energy Renovation Opportunity can only finance some home renovation programs. You can use this financing option for the following projects:
HVAC Systems
HVAC is a group of systems that regulate temperatures and humidity in the home. California is very hot. Therefore, these systems will be necessary to keep the home comfortable. The components of HVAC include:
- Air conditioning. The main purpose of an air conditioner is to circulate cool air throughout the home for a comfortable atmosphere.
- Heating. Your home will be heated using a furnace. If you want to lower your energy costs, you can use solar panels for heating. You can install heat pumps where a traditional furnace does not cover enough space.
- Ventilation. All buildings often need ventilation to remove stale air from the inside.
- Air filtration. The last component of HVAC is the air filter used to remove airborne particles like fungi, spores, and pollen.
The HVAC system offers many benefits, including a quieter environment and lower electricity bills. If you want to upgrade your HVAC system, you can receive financing from the government using the HERO program.
Solar Installation
The installation of solar panels has become a popular practice among homeowners in California. Transitioning to solar energy involves a home visit from an expert and installing solar panels. Some homeowners install solar panels to supplement their electricity or transition to solar energy. Some of the benefits offered by solar energy include:
- Lower electric bills. Your electricity bill takes up a significant percentage of your utilities. Since the sun is naturally available, you can lower your electricity bills by transitioning to solar.
- Environmental conservation. Solar energy significantly saves and preserves the environment by reducing carbon emissions.
- Energy independence. Although you cannot influence the cost of electricity, switching to solar power can help you control your energy source.
Solar is a cheap energy source for many homes. However, the initial cost of installation can discourage homeowners from taking on the project. Fortunately, the HERO program offers 100% financing on installation and labor for solar panels.
Plumbing and Sewage
Water and sewerage systems are critical parts of home improvement. With time, these systems could break down and fail to work efficiently. In cases where you add an accessory dwelling unit to your home, you may need to upgrade these systems to serve your home and the ADU efficiently. California residents can exploit the HERO program and financing for their sewage and plumbing home upgrades.
Drought Resistant Landscaping
Drought is a recurring feature in California’s climate. The state's unique geography and climate foster a diverse ecosystem that relies on water. Switching to drought-resistant landscaping will look beautiful, save resources, and support biodiversity. Some of the components of drought-resistant landscaping include:
- Rock gardens.
- Hardscaping.
- Native plants.
- Mulching.
The state views such a home upgrade as a significant way to conserve water and curb the effects of drought in the state. For this reason, you could receive significant financial support to fund the project.
Eligibility for the HERO Program and Financing
A HERO loan offers many benefits for homeowners transitioning from traditional to more energy-efficient systems. However, not everyone can successfully apply for the financing. You can receive HERO financing if you meet the following eligibility criteria:
- You live in California. Where you live significantly affects your ability to receive financing for your home improvement projects. Many things make California special, including its natural beauty and yearlong sunlight. While these are good reasons to visit the state, its residents also enjoy the financial benefits offered by the HERO program.
- You have a mortgage debt of less than 90% of the property value. Before you apply for HERO financing, you must ensure that you own at least 10% of your home equity. This means that you should have paid 10% of the mortgage debt.
- Your mortgage and taxes are current. Homeowners who qualify for this financing program currently pay their property taxes and mortgage payments. You may be denied the loan even if you owe less than 90% of your mortgage but have not made consistent payments for the past few months.
- You have not filed a recent bankruptcy filing. In California, bankruptcy is a legal proceeding that allows debtors to discharge their debts or make a plan to repay creditors. When you file for bankruptcy, you can keep some equity in your home. However, the process can have severe negative effects. You will not be eligible for this financing program if you have filed a recent bankruptcy.
Process of Participating in the HERO Program
Everyone wants to live in a home with the latest and most efficient systems. Some homeowners hesitate to install these energy-resistant systems due to the lack of installation fees. Additionally, some people want to avoid the high-interest loans available for such projects. You do not need to worry about those concerns with the HERO financing program. Applying for HERO financing has the following steps:
Online Application
The first step in securing HERO financing for your home renovation project is checking your eligibility for the loan. Your eligibility criteria are based on your mortgage and residence balance. Sometimes, your bankruptcy can impact your application.
You can apply online when you are sure you qualify for the program. Many homeowners are concerned about their credit scores. You must understand that your credit score does not play any role in your ability to secure HERO financing. Whether or not you receive your loan is determined by your home equity.
When your application for HERO financing has been approved, you can make the renovations. You will then begin to pay back the loan using your property taxes.
Seek the Services of a Certified Contractor
When you want to exploit the HERO Program for your home renovation project., you will require the guidance of a professional contractor. Your contractor will help you safeguard your investment and guide you through every step of your project.
Benefits of the HERO Program
For homeowners who wish to make energy- and water-efficient home renovations, the HERO loan may be of significant help. The following are some benefits you accrue from the program:
- 100% financing. Unlike other financing options for home improvement projects, HERO offers 100% financing for your project. This includes the cost of materials and labor.
- Easy application process. The process of applying for HERO financing is fast and easy. This is because you can make an online application. Compared to other project financing loans, you will not need to undergo a tiresome process to receive some funds.
- Approval system. HERO financing is based primarily on the equity you have in your home. Your credit score and other financial issues do not affect your ability to receive funding. This makes it easier for many homeowners to start and complete their home renovation programs.
- Guarantees. Quality is guaranteed when you use HERO financing for your home upgrade projects. This is because you must work with approved contractors. Additionally, you must use materials that meet government performance and efficiency standards.
- Flexibility. The terms of repayment of the HERO loan range from five to twenty-five years. This gives you enough time to pay off the loan comfortably. With HERO financing, the interest rate for the loan is fixed. Therefore, you will not need to worry about increased interest rates and penalties associated with other types of loans.
- Transfer of payments after the property sale. You can transfer the payments to the new property owner if you sell your home before completing your loan.
Setbacks of HERO Financing in California
Some of the cons that may be associated with using a HERO loan for your project include the following:
Difficulty Selling Your Home
Some homeowners upgrade the systems in their homes to make the property more marketable. While the installation of solar panels, sewage upgrades, and proper roofing may attract buyers, most people may be turned off by the HERO loan.
When a person purchases a home with a pending loan, the loan payment is transferred to them. Therefore, if you want to renovate your home system using the HERO program, you should be sure that you want to stay in the home.
Difficulty to Pay
A HERO loan is attached to a property instead of a person. Therefore, it may be difficult to pay off the loan early. Most lenders will not want to work with a home with pending liens. Therefore, you may need to find alternative refinance options.
Alternative Financing Options for Your Home Remodelling Project
If you do not meet the eligibility criteria to secure HERO financing for your home remodeling project, you can explore the following options:
- Home-equity loans. Home equity mortgages offer tax benefits with no closing costs. With a payment period of up to thirty years and a fixed interest rate, it can be a good option to kickstart your project.
- FHA 203(k) Mortgage. The FHA loan allows you to refinance your first mortgage and combine it with the improvement costs to make a new mortgage. Since your house will be worth more after renovation, the loan amount will be based on the updated home value.
Where Can I Find a Certified HERO Contractor for My Project?
When you have a basic idea of your desired renovations and financing from the HERO program, the last step is to find a certified contractor. Energy and water-efficient upgrades can be very complicated projects. Therefore, you must ensure that your contractor meets these requirements:
- Have a valid license. Before entrusting your project to a contractor, you must ensure they are licensed and certified to provide these services in California. A valid license means the contractor has the necessary training for a successful project.
- Adhere to consumer safeguards. The right contractor is the one who adheres to safety measures for consumers.
Find Competent Home Remodeling Services Near Me
For homeowners who want to make their homes more energy efficient, the Home Energy Renovation Opportunity may be their best financing option. Many people are attracted by the thought of renovating their homes to conserve energy and curb the seasonal drought in California. However, the cost of these renovations may be a setback. With HERO financing, the cost of your project and labor are covered.
The government offers HERO financing for homeowners who want to install energy efficiency upgrades. Some projects for which you can receive this financing include installing solar panels, roofing, and HVAC systems. If you want to explore the HERO loan for your home improvement projects in Orange County, CA, you will benefit from our guidance at Orange County Home Remodeling. Contact us today at 657-660-3481 to discuss your home upgrade needs.
