Having acquire the house, we still need to fund the remodeling. Our goal of putting more energy efficient homes in the market is to sell this property outright after the fix-up. A fall back is to lease it, preferably with an option to sell.
We are considering a few options.
- Bank credit line. We have been talking to a local bank who can provide a revolving credit line. This is probably the easiest way and therefore it is a method used very frequently by business. Developing a relationship with a local bank can also help future projects in the area. Very likely we will use this as the first choice.
- Conventional loan. Conventional mortgage rates are still low, in the mid 3% to high 4% range. Getting a conventional loan does take longer and more verification, so it may not fit our quick turnaround agenda well. If we were to hold the property for longer, this can become an attractive option.
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Energy efficiency loan. Different states offer different incentives in the form of low interest loans for energy efficiency improvement projects. Our project certainly will fit into this category. PACE (Property Assessed Clean Energy) was once gaining popularity but was practically slammed shut by Fannie Mae in mid 2010. However, various municipalities gradually reviving the PACE programs, principally by agreeing to making the PACE loans junior to the Fannie Mae loans.
Two types of loans, targeted for energy retrofits with over 20% projected savings, are available in Maine:
- PACE loan: up to $15,000 15-year loan at fixed APR of 4.99%, no cost, junior to primary mortgages or existing liens, transferrable to new owner, offered by participating municipalities. However, PACE loans can only be taken out for owner occupied units so we won’t be able to take advantage of it.
- PowerSaver loan: up to $25,000 15 or 20-year loan at fixed APR of 4.99%, no cost, can be a second mortgage, non-transferrable, offered statewide.
It is also likely we will use a combination of some these options as we re-assess our situation and need.
Coming next: Leaky like a lobster trap.
See also: Partnering With Green Hearted Companies and the entire From Foreclosure To Green Home series.