“Is HERO Financing a Good Deal?” Tim in Vacaville, CA Asks an HVAC Expert

Tim in Vacaville, CA is looking for ways to save on heating and cooling costs. Tim asks:

“I’ve been trying for a few months now to save money on heating and cooling costs. Actually, I’ve been working hard to cut costs all throughout my budget and one area that seemed like a good place to start was with the electric company. I got the idea because my neighbor told me he was saving a ton of money each month on his own heating and cooling bills ever since he started taking what he called a “whole-home approach to energy efficiency,” which involved making a series of upgrades to his home and some of his major appliances.

I’m curious to know more about this idea of a whole-home approach to energy efficiency, but that’s not my main question. My neighbor also mentioned that he had used HERO financing to help pay for the upfront costs of the upgrades and that he probably couldn’t have done it without HERO’s help. What I want to know is: How does HERO financing work, first of all. And, is HERO financing a good deal? My neighbor said that, by his projections, the money he was saving on heating and cooling costs would end up paying for the upgrades before he could accrue a penny of interest. It sounds too good to be true!”

I don’t know about you, Tim, but I remember when saving money on your heating and cooling costs stopped and started with simply using your furnace or air conditioner less. Fortunately for us, technology, as well as our knowledge of how airflow works, has drastically evolved and we now have many new ways to be more efficient, like increased HVAC efficiency, improved insulation, and even more tightly sealed and insulated windows. But, as you seem to be well aware of, it can sometimes be tough to sort all of this new info out.

That’s why I’m so glad that Tim wrote to us with these questions, giving me the opportunity to share the 411 from a heating and cooling service expert’s perspective. I know he isn’t the only one with questions! We’re fortunate enough here in the Sacramento area to qualify for the Home Energy Renovation Opportunity (HERO) financing program that Tim mentions. I’m happy to explain a little bit about what it is, how it can help you save money, and, most importantly, answer Tim’s question, “Is HERO financing a good deal?”

Is HERO financing a good deal?

Let’s cut right to the biggest and most important question here: Is HERO financing a good deal? Well, HERO financing is a good deal for any homeowner who is looking to make their home more energy efficient and lower their heating and cooling costs, as long as that homeowner is not also planning to sell the house within the next 1-3 years for reasons that we’ll get into in the next section.

I’ve talked in the past about how the HERO program works for energy-conscious homeowners, but I don’t think a little refresher course on such an important topic would hurt. You can learn more about the program from this handy HERO energy efficiency financing guide, but I’ve also pulled out some of the main points below:

• Who’s behind HERO: HERO is a local government-approved PACE (Property Assessed Clean Energy) program that allows homeowners to finance energy-efficient and water-saving home upgrades. PACE is a public-private partnership that makes energy-efficient upgrades affordable to homeowners.
• Where is HERO available: HERO is currently only available in two states: California and Missouri. Sacramento, the largest city in our coverage area, was actually one of 16 cities and five counties across our state that adopted HERO earlier this year, bringing the total number of Californians who can apply for the program up to a whopping 85 percent.
• What is HERO financing: HERO financing can cover up to 100 percent of energy efficient or water saving upgrades. HERO offers up to 25-year terms, fixed rates, and folks can borrow as much as 15 percent of their home’s value. Qualified upgrades include:
  • More efficient HVAC heating and cooling systems
  • Insulated windows and doors
  • Plumbing, including water heater appliances that use less energy
  • Solar panels
  • Drought-resistant landscaping

The Pros of HERO Financing, i.e Why it Is a Good Deal

With help from HERO-approved contractors, this specialty financing program offers affordable, whole-home energy upgrades like the ones that our friend Tim is hoping to make, so it’s probably no surprise that I’m anxious to go over the pros of HERO financing first. Simply put, a HERO loan is a very good deal for the majority of Northern California homeowners to take the financial plunge into making their home more energy efficient.

Here are some of the main HERO financing pros and cons that immediately come to mind. Let’s start with the pros:

• Easy application process: HERO offers an easy online application process. You can find the HERO application here. However, an even easier way to go about this is by working directly with an experienced HERO contractor.
• Simple approval system: Unlike most financing offers, HERO is based primarily on the equity in your home and your debt payment history rather than your credit score, making it easier for more homeowners to qualify.
• Convenient payment structure: There are no upfront payments required when you work with HERO; instead, payments are made every year when you pay your property taxes.
• Flexible terms: Terms range from 5 to 25 years, depending on what best suits the approved homeowner.
• Guaranteed high-quality work: When using HERO financing for home upgrades, homeowners must work with approved local contractors, as well as appliances that meet all levels of government efficiency and performance standards, meaning the benefits of your upgrades are guaranteed.

One Con of HERO Financing to Consider

Now, I’m a fan of HERO financing, so I don’t have as many cons for homeowners like Tim here to consider, but there is the one potential drawback that I mentioned briefly above. The most legitimate hesitation to participating in HERO financing is what happens if soon after you take out your loan you decide to sell your house? The loan is paid for through your property taxes, and it is possible to transfer it to the next owner, but it may make selling your home more difficult. I always tell potential applicants to make sure they want to stay in their homes for at least the next five years. That way, they also get to enjoy the cost savings that come along with their energy efficient additions.

I always tell potential applicants to make sure they want to stay in their homes for at least the next five years.

My sense, though, is that Tim is not planning to sell his house anytime soon. Most homeowners who start to inquire about making energy efficiency upgrades and taking a whole-home approach to saving money on utility bills are usually settled into their houses and hoping to save some money over the long haul.

One last thing I want to stress, though, for Tim and anyone else, is that I strongly recommend working with a contractor familiar with HERO financing. They can make sure the application is done right, and they’ll have plenty of experience installing the energy efficient touches you need. Luckily for you, our team at Bell Brothers is HERO approved! In fact, I bet we’ve even worked with some of your neighbors.

Contact the HVAC professionals at Bell Brothers to schedule a whole-house assessment for energy efficiency. We’ll offer recommendations and upgrades that are sure to increase your year-round comfort—and decrease your power bills.

Wondering how to finance a new HVAC system, windows, or plumbing? HERO is a unique financing option that helps California homeowners afford energy efficient upgrades to their home. Contact Bell Brothers, a HERO-approved contractor, to learn more. Our local HVAC, plumbing, and window specialists will walk you through the entire process, from applications to installation.

Image courtesy Pixabay user stevepb