Making energy improvements affordable

Community programs can help consumers reduce the cost of making home energy-saving improvements.

The upfront costs of making energy improvements often stand in the way of homeowners making changes that will ultimately save them energy and money in the long-run. Community programs can allow consumers to reduce the initial cost and more quickly realize a return on their investment. Programs are income-based grants, low-interest loans and utility company rebates.

Income-based programs include community action agency Weatherization Assistance programs,Community Development Block Grant (CDBG) home repair programs and Air Seal programs through certain energy programs.

Community action agencies are located throughout the country to assist people with low-income become self-sufficient. Because high energy costs hit the poor disproportionately harder, especially if they live in an older home that leaks like a sieve, weatherization is an important way to reduce energy use and costs. Weatherization involves doing an energy audit to identify air leaks, sealing the leaks and providing insulation in the proper places and amounts. The Michigan Community Action Agency Association describes income qualifications and local offices. Weatherization is a free service for those who qualify.

The CDBG is available to people who have low to moderate income as defined by the U.S. Department of Housing and Urban Development. Its purpose is to improve the housing stock of a community. Energy improvements can be done along with other major home repairs up to $22,000. Depending on income and local guidelines, participants pay back the low-interest loan in affordable payments or pay back the zero-interest loan when the house is sold. Check with city, township or county planning departments to learn more about CDBG programs.

The Southeast Michigan Regional Energy Office is offering a free Air Sealing program to people with low-income. People who qualify receive a free energy audit and free caulking and weather-stripping as well as information about what else the house needs when they can afford it. Special programs can be found in Bath and DeWitt, Grand Rapids, Marquette and Traverse City as well as through energy demonstration centers throughout Michigan.

Michigan Saves is a low-interest loan program that is valuable because it is an alternative to putting energy improvements on a credit card or getting a high-interest consumer loan especially when it is difficult to get a home equity loan. Participants must have a 640+ credit score and a debt-to-income ratio < 50 percent.

Michigan Saves home energy loans have the following features:

  • Unsecured; no appraisal or home equity required
  • For owner-occupied homes, can be a second home
  • Loans between $1,000 and $20,000
  • Fixed APR no higher than 7 percent
  • Terms up to 10 years, no prepayment penalty
  • Must use Michigan Saves authorized contractor who does loan application over phone or internet

Energy improvements include insulation, furnace, water heater and windows. An energy audit is often required. In some cases, a roof can be financed if energy improvements are also done.

Utility company rebates reduce the upfront cost of making energy improvements as well as on-going energy costs. Appliances, insulation, windows, light bulbs, programmable thermostats, furnaces and water heaters are usually covered. Check gas and electric company websites to learn about rebate amounts and requirements that often include getting an energy audit, using approved contractors and purchasing ENERGY STAR materials.

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