It’s been a while since I’ve blogged consistently. I had a bit of a pause there when my 90 year old mother became ill and passed away. You know, it’s never easy and being the executor on an estate requires some focus. But I’m back!
I’ve got some interesting topics to share with you because even though I wasn’t writing, I’ve been thinking about topics to share. Kiddie condos aren’t just for kids! Reverse mortgages aren’t the last resort you thought they were. Why you might want to consider buying a rental property inside a retirement account. What’s hot and what’s not as we move into summer. Rehabbing a 1920’s house and living within walking distance of restaurants and entertainment. Doggy dining. Placer Wine Trail and other wine tastings around town. And this week’s subject is a reminder and warning about “Easy financing”.
Who’s a HERO? Well, it’s not Hercules. In fact, the question should be what is a HERO? It’s an acronym (Home Energy Renovation Opportunity) for a type of energy efficient loan program that home owners can take out to make their homes more energy efficient. Examples of HERO loans include but are not limited to energy efficient window, heat pumps, and even solar. You may have heard of different names such as PACE (Property Assessed Clean Energy) or Ygrene offer the same benefit to consumers. It allows you to pay for expensive energy efficient upgrades in a loan that is added to your property tax bill for up to 30 years. Sounds like a great way to absorb expensive upgrades, right?
Not so fast. First off, these loans become a lien on the house and as long as you pay off your loan before you go to sell your home, you’ve probably scored a good deal that doesn’t show on your credit report and can provide some beneficial energy savings. On the other hand, if you sell your home before the end of the loan term, the chances are pretty high that you’ll be on the hook to pay it off by the close of escrow. Hang on, I can hear some lenders loudly objecting at this point that there are, in fact, loan programs that will allow a purchase loan to go in second position. The number has steadily decreased and in return for the added risk that a loan default will short them, they ensure they get compensated on the front end in the form of a higher rate so not all buyers who finance want to take on a more expensive loan. In addition, a buyer may not want to take on an additional loan against the property because the reality is that the buyer is paying the purchase price PLUS the energy loan which could be an additional $30k! Is the house worth the purchase price + $30k additional dollars? That includes cash buyers.
I’ve noticed that the programs are often solicited by young people who don’t even own a home and don’t know the implications. I recently sold a home for a client where we discovered that the heat pump she had installed had a $12k balance on a PACE loan that had to be paid off before the lender for the buyer would approve the loan. A sum of that magnitude severely cuts into your profit and it did cut into hers. If you’re thinking about this type of energy efficient upgrade, don’t sign until you’ve really considered if you could afford to pay off the loan when your home sells because remember, not everyone sells when they want to. Many sell because they have to – divorce, death of a spouse, job transfer, and even finding out you’re allergic to some tree that are planted in your neighbor’s yard (yes – someone moved because they were allergic to cedars!)
Mini market update: The Fed didn’t raise the rates again when they last met, but they are still heading up a bit. Sellers here are thinking twice about selling when they consider taking on a higher interest rate.
I’ve got to catch up on some wonderful success stories:
Sue Debey, who is retiring and moving up here from San Jose to be near friends and family, purchased a lovely one story home with a large pool in West Roseville. She’s looking forward to hosting lots of parties at her home and being near her grandchildren.
Mike and Susan Marucci also from the Bay Area purchased a great home in the Sacrament area with a pool so they could be near to their daughter who lives in the area because she’s expecting! Fun times with family in the pool this summer!
My sister and I – woohoo sold my mom’s condo in Carmichael. Added flooring, painted walls and cabinets, new hardware and lights and got 5 offers over asking. And we were so happy it went to an older lady who was going to live there with her daughter.
Terri Lago who sold her halfplex in Sacramento with 5 offers and the sale price $11k over asking! Terri is going to be retiring and making a move out of state – possibly to Oregon with her niece.
HAPPY MOTHER’S DAY to all you moms out there!!!
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