Home improvement has surged in recent years (and particularly in recent months) because Americans are changing the way they use their homes.
If you are interested in jumping on the home improvement bandwagon, consider getting a green loan. But what’s a green loan?
These are loans you take out to make green or eco-friendly home improvements, like a solar panel installation, or a weatherization. Read on to see 7 tips for taking out a green loan.
1. Decide On an Eco-Friendly Home Improvement
Before you go over to your bank or any other financial institution to ask for money, you need to decide which eco-friendly home improvement you would like to focus on first. There are many different kinds. For example:
- Solar panel installation
- Kitchen or bathroom remodels with sustainable materials
- Water-efficient and green plumbing
- An accessory dwelling unit from Acton ADU
- Window installation with double or triple panes
- Low-VOC floors
As you can see, the choices are endless. Not only are you doing something good for the environment, but you also end up doing a lot of good for your wallet and health with these green home improvement projects.
Taking out a green loan is pretty similar to taking out a loan of any other kind. The following steps will help further.
2. Estimate How Much It Would Cost You
Research online or by calling around to various contractors, to see what your green home improvement project would end up costing you.
This is just an estimate, of course. As the rule goes, you always end up spending twice as much time and money on any home improvement project. Or even more.
Once you have an idea of what this home improvement project will cost you, you will be able to do the necessary calculations and present your findings to the lender you choose, as seen below.
3. Check Your Credit Report
It’s always a good idea to check your credit report at least once a year, if not more often, to ensure there are no unscrupulous or unnecessary additions to your credit history.
Once you know your credit score, you will know how easy taking out a green loan will be for you. The higher your score, the more lenders will trust you and lend to you.
4. Calculate Your Monthly Payments
There are many monthly payment calculators online that you could plug your information into. This way you will be able to tell exactly what your monthly payments for your green loan would be.
This is important because you want this green loan to be affordable and within your budget. There is no point doing a green home improvement project if you end up in a dangerous financial situation because of it.
5. Compare At Least 2-3 Lenders
Do not go with the first lender that you speak to, or with the financial institution that you have banked with for years or decades. They might not give you the best rate for your green loan.
Shop around! Take the time to do this right, and it might harvest an interest rate difference of 1-2% which will result in huge savings over the entire loan period.
For example, annual percentage rates can vary all the way from 6% to 36% depending on your credit history, the kind of green loan you are asking for, and more. Typical loan payment periods go from 2 to 7 years.
And typical amounts borrowed range from $1,000 to $100,000.
This should give you a better idea of what you should be looking for in your lender.
6. Go For Pre-Qualification
There are many websites online, like NerdWallet and more, that will allow you to pre-qualify with several different lenders, and see what rate they offer you. This is the best kind of shopping around.
Not only can you do this sitting at home in your pajamas (or less), but it will instantly give you an idea of whether taking out a green loan is feasible or your current financial situation or not.
In this manner, you can either apply for the prequalified rate that works best for you. Or decide to postpone the green loan until a further date when your credit history is better or your financial situation improves substantially.
7. Gather Your Documents and Apply for a Green Loan
Once you have gotten the green light on your green loan (see what we did there), you can gather up all your documents to apply for your green loan!
Finally, you must be thinking. Like every loan application process, a green loan isn’t any different. Even though the government likes the idea of consumers improving their homes to go green, it doesn’t make it easy!
Jumping through all these hoops is worth it though because once you have the money to make your eco-friendly home improvement, you are going to be well on your way to making this money back (and more).
How, you ask? Well, taking out a green loan is such a great idea, because it helps you reduce your water or energy bills in the long run.
For example, with a solar panel installation, your energy bills (once you pay off the solar panel installation costs) are almost zero! That sounds like salvation for folks who have a heart-attack-inducing electricity bill.
Bonus Tip: Don’t Forget about Government Funding
The best thing about certain green home improvement projects is that the government is happy to provide you with funding to do them. Solar panel installations fall into this category depending on which state you live in.
Don’t forget to research this BEFORE you end up going to a private lender.
Now You Know All about Taking Out a Green Loan
A green loan shouldn’t be something that other people take out. It’s accessible to everyone! Now that you have the green loan tips from above in your mind, you can start your green home improvement project, too!
Looking for other home improvement articles? Check out our website for more and never stop learning!