What is HERO?
HERO stands for Home Energy Renovation Opportunity. In 2009 the State of California approved legislation authorizing cities and counties to establish voluntary programs to pay for energy efficiency, water efficiency, and renewable energy products which are permanently attached to property. The HERO Program just now hit Thousand Oaks and is a voluntary program and partnership between the participating city and homeowners to offer a unique, affordable financing option for energy-efficient upgrades that increase efficiency, comfort and savings for your home and property.
How HERO works:
HERO offers more consumers access to energy-efficient options because HERO is financed as an assessment on the property, not as a personal debt to the borrower. The interest on these payments may be tax deductible (see your tax professional for advice). Approval for HERO is primarily based on the equity in your home and your debt payment history, rather than your credit score. HERO finances 100% of the cost to purchase and install eligible products, with fixed rates and flexible terms of 5 - 20 years, depending on the life of the component you are installing.
Is it Transferrable if I sell my home?
Should you decide to sell your property before the HERO assessment is paid off in full, any remaining balance can transfer to the new buyer with their permission. It can be a benefit to a buyer, in that they don't have to go through the hassle of choosing and installing the components, nor does the expenditure show up as a personal "debt" on their credit report!
What improvements are eligible?
(For a full list, visit https://www.heroprogram.com/guide-to-savings)
Solar Panels; Solar Batteries; Small Wind Turbines; Home Fuel Cells; Heat Pumps; POOL pumps and water heaters; Heating & AC; Windows; Doors; Skylights; Roofs; Ducts; Ventilation fans; Attic Wall Floor Insulations; Lighting & control systems; High efficiency Water Heaters; Artificial Turf; Drought-tolerant Landscaping; Irrigation & Rainwater systems; Faucets, toilets, showerheads; Whole house fans, room fans, and more.
How do you find out what what the best project are for your home and what you're qualified to borrow?
First of all, if you're planning to sell your home and want to update to get top dollar, contact your REAL ESTATE Professional (REALTOR) to get an indepth idea on what homebuyers in your area want and need.
As far as what you can borrow, it depends on your equity: UP to 15% of your home's value can be accessed. The loan is not predicated upon your credit score, nor does borrowing though HERO for your improvements show up on your credit report. The amount you borrow does not count as an outstanding loan balance, so it will not affect how much borrowing power you have overall. And you can finance through your propety tax bill for up to 20 years (depends on life span of the component involved).
You can finance multiple projects at once, as long as all project are approved! Only HERO approved contractors, or homeowners who go through the hERO self-install agreement, may work on your home. To find a contractor for your area, visit https://www.heroprogram.com/find-contractor.
To find out if HERO is available in your area, visit https://www.heroprogam.com. As far as I can tell, cities in California and in Missouri are currently eligable.
BUYING OR SELLING A PROPERTY WITH "HERO" FINANCED IMPROVEMENTS?
So, you might be wondering if doing these projects and financing through HERO is a good idea if you're thinking of buying a home with existing HERO financing on the tax roll, or Selling your home in the near future. The answer is YES! Let me tell you why:
1. Buyers WANT homes that are upgraded and have energy effecient features already installed. Time is money, as they say, and having the convenience of the projects already in place and financing spread out over 10 - 20 years in invaluable. "When choosing between equivalent homes in price, size, location and amenities, 80% of respondents report that energy effeciency as a major impact on their decision" ~ according to 2015 Energy Pulse Study.
2. Since HERO is a voluntary property tax assessment (added to the tax bill) and not a traditional loan, as a seller you simply inform your agent of the assessment and include tax assessment information in your seller disclosures. Be sure to save all receipts, warranties and contact info on the work done! Also of great value will be proof of your energy savings since having the improvements installed, so save your "before & after" bills!
3. Transfer of the Assessment:
a. FULL: In your disclosures list the assessment as a "full transfer". With a full transfer, the HERO assessment stays with the property and is entirely transferred to the buyer, who is then responsible for making payments on the remaining balance through their property taxes.
b. PARTIAL: You may want to negotiate with the buyer to have a portion of the assessment paid by you through close of escrow. A "partial payoff" is when the seller and buyer negotiate a portion of the HERO assessment to be paid off at close of escrow. THERE IS NO PRE-PAYMENT PENALTY FOR PAYING THE ENTIRE "HERO" ASSESSMENT PRIOR TO THE MATURITY DATE.
4. Unlike a traditional home improvement financing that is transferrable, such as a Solar contract which up to now has been very common but frought with resale complications, the buyer does not need to reapply for HERO because the assessment is already attached to the property. So, not only does the closing of the sale go through smoothly, but the buyer is not saddled with an additional "debt" on their books! NO DEBT INVOLVED ~ just a property assessment that is included in their semi annual propety tax bill!
GOING "ENERGY EFFICIENT" DOESN'T COST ~ IT PAYS!
IF YOU ARE THINKING OF LISTING YOUR HOME AND ARE NOT SURE WHAT ENERGY EFFICIENT FEATURES WILL BE MOST VALUABLE AND YIELD YOU THE HIGHEST RETURN, CALL ME!
I am the local expert in the Conejo Valley and I will help you weigh your options!
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See you at the closing!