How the Inflation Reduction Act is Helping Homeowners Go Solar

Electric vehicle charging off battery

On August 16, 2022, President Biden signed the Inflation Reduction Act of 2022 into law. This act includes both new and revised tax incentives, like a solar tax credit, for clean energy projects, which have been growing significantly in popularity in recent years.

Here are the most important things to know about the act — and how you might be able to leverage it to lower your tax bill.

The Basics of Solar Tax and Clean Energy Incentives

A tax credit is a dollar-for-dollar reduction in your federal income taxes. In order to be eligible for the solar tax credit, you have to meet some basic criteria:

  • Your system must be installed and deemed operational by a city inspector in any tax year from 2022–2032.
  • Your project must fall under the umbrella of solar, geothermal, or fuel cell energy.

The solar credit amount under Section 25D, previously known as the Residential Clean Energy Credit, is dependent on the year in which the system installation was completed. It has increased from 26% to 30% for installations completed after December 31, 2021, and this credit will continue until December 31, 2032. In 2033, the credit will drop back down to 26%, then to 22% in 2034, and is set to be eliminated beginning in 2035.

If you’ve purchased and moved into a new home with a solar system and own the system outright, you’re eligible for the inflation tax credit the year you moved into the house. However, if you’re leasing the system or purchasing it through a power purchase system (PPA), the company that owns the system is eligible for the ITC instead.

To claim the credit, you’ll need to file IRS Form 5695 along with your tax return. On Part I, you’ll calculate the credit, and input the result on your 1040.

Why Homeowners Are Going Solar Now More Than Ever

In the second quarter of 2022, residential solar set its fifth consecutive quarterly growth record. Why are more homeowners than ever investing in solar? Industry experts point to a few reasons.

“There are two primary concerns driving growth: increasing electricity cost and decreasing grid reliability,” explains Matt Bramson, Elevation Executive Vice President of Marketing and Sales.

Bramson went on to explain that unless multiple batteries and associated load-handling equipment is installed, a battery cannot backup an entire home or even an HVAC system for long in a power outage. Additionally, the rate that utilities pay homeowners to buy back excess solar power is often so low that homeowners are finding it makes more financial sense to store that power in a battery during the day and consume it at night versus selling it back to the utility.

The rise in Electric Vehicles (EV) also plays a major factor in the purchase of batteries to allow for vehicles to charge overnight.

There’s one more often-overlooked factor driving solar purchases for homeowners: eliminating wasted energy.

“We like to remind homeowners that the cheapest and cleanest energy of all is that which you never consume,” said Bramson. “Most homes waste 10-20% of the energy they consume as a result of inadequate insulation, leaky HVAC ducts, and drafty doors and windows. Another 8-12% is wasted through suboptimal resident and appliance behavior — leaving lights and fans on, running wasteful appliances like small space heaters, and maintaining older appliances that lack energy efficiency. Solar providers like Elevation offer services that help eliminate home and resident energy inefficiency.”

Frequently Asked Questions About the Inflation Reduction Act

Do I qualify for the Inflation Reduction Act?

There are a couple of requirements you must meet in order to qualify for the Inflation Reduction Act. First, you must own the solar or battery system by purchasing it using cash, a solar loan, or a home equity investment, as you cannot use a lease or PPA financing to claim the tax credit. You’re also required to have an income tax liability, as this incentive was introduced to reduce it.

How long does a solar panel system take to install?

Most systems can be installed in a day or two, but you should factor in some extra time for the entire process, as you first need to be approved for financing and utilities, get the proper permits, etc.

How does the solar tax credit work?

In addition to meeting the stated criteria to qualify for the credit, you’ll need to file IRS Form 5695 along with your tax return to claim it. You’ll calculate the credit on Part 1 of the form, and input the result on your 1040.

In terms of financing, there are a handful of different ways to fund solar purchases — including designated solar loans that are widely available. However, they vary quite a bit in terms of fees, APRs, and timelines, so you’ll want to explore your different options. Home equity loans are also a popular choice, but since you’re taking out another loan on top of your mortgage, you’ll want to make sure you can handle additional monthly payments.

You can also access your home equity with a home equity line of credit (HELOC), which gives you flexibility in terms of amount and frequency of access. However, due to variable interest rates, monthly payments may fluctuate and be unpredictable, and your lender can freeze your HELOC at any time if your credit score drops too drastically.

Finally, a home equity investment (HEI) can give you access to your equity in cash relatively quickly in exchange for a share of your home’s future value. What separates a home equity investment from a loan or line of credit is that it isn’t a loan, and there’s no interest and no monthly payment. You can use the money for virtually anything you’d like. At the end of the effective period (or anytime before then), you buy out the investment with savings, a refinance, or the sale of your home.

With recent record highs in home equity and the revised tax credit, it might be the perfect time to make solar investments in your home.

Do you know how much equity is in your home today? Our free Home Equity Dashboard can help!

YOU SHOULD KNOW…
We do our best to make sure that the information in this post is as accurate as possible as of the date it is published, but things change quickly sometimes. Hometap does not endorse or monitor any linked websites. Individual situations differ, so consult your own finance, tax or legal professional to determine what makes sense for you.

5 Characteristics to Consider to Choose the Right Neighborhood

aerial view of suburban neighborhood

When it comes to determining the best place for your family to live, there are a number of considerations (and opinions) to balance — but ultimately, it all depends on your personal priorities, values, and budget. Your decision should be one based on both head and heart: while you want to make your whole family as happy as possible, you also want to make sure you’re making a solid investment.

If you hail from the area you’re looking to buy a home in, you’re already at an advantage, since you’re more familiar with neighborhoods and might even have a clear idea of the streets where you want to house hunt. However, if you’re moving to a totally new-to-you city, it might be a bit more daunting. No matter what your circumstances, though, there are several factors to look at before you commit to a place.

1. Safety

Safety is one of the biggest and most important factors to consider in a potential neighborhood, especially if you have children. Fortunately, there are many websites that aggregate crime statistics in a given area so you can easily compare them before even visiting in person, including NeighborhoodScout, SafeWise, and SpotCrime.

When exploring potential streets, make note of the potentially less obvious — but still important — features, including the amount and placement of street lights and sidewalks. Conversely, you should keep an eye out for vacant or abandoned buildings or any other sights that feel unsettling or concerning as you look around. It’s also a good idea to drive around a potential neighborhood at night to get a feel for it at different times of the day.

One more consideration is whether your home is on a main road or on a side street or cul-de-sac, especially if you’re hoping to purchase a home with secluded backyard space for your children to play.

2. Schools

If you plan to or have children, school quality and proximity is another major factor that can make or break your choice of location.

It’s easy to see online, at a glance, how districts are performing and how large they are on Niche and GreatSchools, but it is often worth your while to connect with parents within the district(s) you’re researching to get their firsthand thoughts as well. And if athletics are of interest to your kids, take a look at the size and variety of the sports programs and how the teams typically perform.

3. Convenience

Think about your day-to-day routine and the types of conveniences you value. How close are grocery stores, hospitals, doctor’s offices, pharmacies, parks, and shopping centers? Are you near enough to highways if you need to quickly and easily access other cities, or see friends and family?

Most importantly, if you drive to work or take public transportation, time and map out your potential daily commute. Choosing an area that results in an hours-long drive or multiple train transfers won’t just cut time out of your day that you could spend with your family — and zap your energy — but it could cost you in gas and train tickets as well.

4. Price

Though safety, schools, and proximity to conveniences are the most important aspects when researching areas, you can begin shopping by price once you narrow down a neighborhood based on these criteria. It helps to get an idea of current median home values in the area, as well as property taxes, so you can more accurately and quickly assess what’s within the normal range and what properties might be overpriced as you shop around. Realty websites including Redfin, Zillow, and National Association of Realtors can help estimate home prices, as well as regional realty publications.

5. Any Other Important Features (to You)

Once you’ve addressed all of your must-have characteristics, think about miscellaneous preferences you or any of your family members might have. For example, do you have preferences on town water and septic versus private, an older versus a newer home, or planned future development in the neighborhood that could increase noise and/or traffic?

With some time, effort, and research, you can make an informed decision that everyone is happy with and land in the right neighborhood for your family.

Knowing your current home value can help you determine your budget for the next one. Do you know what your current home is worth? Our Home Equity Dashboard can help!

YOU SHOULD KNOW…
We do our best to make sure that the information in this post is as accurate as possible as of the date it is published, but things change quickly sometimes. Hometap does not endorse or monitor any linked websites. Individual situations differ, so consult your own finance, tax or legal professional to determine what makes sense for you.

How to Choose a Home Security System for Your House

Woman tapping home security alarm panel

A break-in occurs every 26 seconds in the United States — and homes without security systems are 300% more likely to be targeted than those with them. Everyone deserves to feel safe and protected in their home, and a security system can help give you that peace of mind. However, there are so many different options that it can be overwhelming to decide on the best one for you and your family. Here are some factors to consider in order to make a smart and informed choice.

Why Get a Home Security System?

Perhaps the biggest benefit of a home security system is that its mere presence has been proven to actually prevent burglaries: studies show that 83% of potential burglars check for an alarm system before attempting a break-in. Beyond the clear and tangible safety benefits of both deterrence and faster emergency response, a security system can offer some level of psychological comfort for your family as well. Not to mention, there are even some unintentional benefits that can come along with a security system beyond guarding against break-ins, like carbon monoxide detection, temperature detection, and leak sensors.

Features and Fees

There are several characteristics you’ll want to look at when choosing a security system, but cost is probably toward the top of your list. The average price of a home security system is $700, though they range from $280 to $1,150.

It’s important to note that this is just for the system, and doesn’t include ongoing monitoring fees. While you can usually customize the level of monitoring you receive, these services require a landline, broadband, or cellular connection and have monthly or annual charges attached.

You’ll also have the choice between a wired or wireless system, with the major difference being that the former links the system’s sensors to a control panel through wires in your walls and floors, while the latter connects the sensors and control panels with radio frequency technology. While these days, a completely wired system is uncommon, some do still have plug-in control panels. Many modern systems are also smart-device compatible and have various levels of interactivity that you can adjust to meet your specific needs.

Another consideration is installation — while you can do it yourself in some cases, it may be worth arranging for a professional to handle it. And since each security company knows the ins and outs of their equipment, paying a little extra for one of their professionals to install the system can prevent any issues that could arise from DIY efforts.

Though the features and equipment that are included vary by specific system, here are some of the standard characteristics of a complete package:

  • Control panels
  • Door/window sensors
  • Floodlights
  • Doorbell cameras

Finally, most security system companies require that customers sign a contract for a specific term length — these range from 12 to 60 months, but the average is 36.

Frequently Asked Questions About Home Security Systems

Is it worth it to have a security system?

While the decision to have a security system in your home completely depends on your own priorities, concerns, and budget, it can often be worth it for the protection and peace of mind it brings.

How important is a home security system?

A home security system can be important for many different reasons. In addition to helping you feel more protected, they have the potential to actually deter burglars (more on that below), and can accelerate emergency response in case of a break-in.

Is it better to have a home security system or cameras?

Both cameras and a full system can be beneficial. For those that aren’t interested in a full-scale system — or at least not at first — installing a camera or two is often a good way to see what works for you and your family before making a more involved and expensive commitment.

Do burglars avoid homes with security systems?

They often do. Research shows that 83% of potential burglars check for the presence of an alarm system before attempting a break-in. So a security system can not only assist you during an in-progress burglary, but it might even help thwart one.

What questions should I ask before buying a home security system?

Above all, you want the security system you choose to provide you and your family with a level of safety that makes sense for you. In addition to finding out about the features and costs attached to the system(s) you’re considering, here are some smart questions to ask:

Can I use my smartphone and/or devices to control the system?

As we mentioned above, one big decision to make is whether or not you want to have interactivity with your phone or tablet, or just keep control of the system to the central control panel. If you have a smart device already, you’ll want to check if your home security system is compatible with the device.

Does your security system qualify me for a homeowners insurance discount?

Often, insurance companies will give homeowners a discount on their premium if they have a security system installed, which can put some money back into your pocket. Check with your homeowners insurance provider to see if they offer a discount.

What happens to the system if I move?

While many security system providers will allow you to move your entire security system to your new home — and even uninstall and reinstall it for you! — it’s worth checking into any moving fees, contract stipulations, or notice requirements just in case.

Which is better, a wireless or wired alarm system for my house?

Neither system is “better,” per se — again, it all goes back to what you prioritize and value for your home. Though wired systems generally have signals that are more reliable, wireless systems can often be installed in more areas than wired ones. And in fact, the majority of modern systems are fully wireless except for the control panel. However, some companies still offer limited options for completely wired systems.

How much should I spend on a security system?

The amount you spend on a security system all depends on your own budget and security goals, but most home security systems range from $280 to $1,150, with the average at $700.

Choosing the Right System

There are a few tips that can work for all homeowners when it comes to deciding on the right system.

Prioritize the features you need

One size doesn’t fit all in terms of security systems, and you might be able to “mix and match” depending on what’s most important to you. For example, in addition to standard security or doorbell cameras, there are a variety of sensors that detect everything from motion or floods/leaks to broken glass. Some providers like SimpliSafe offer starter kits and more elaborate kits to match your needs.

Set a budget and compare security systems

Sitting down and running the numbers as you weigh your options not only makes it easier to determine a ballpark cost for a security system, but will also highlight the most affordable options by quickly eliminating the ones that are out of your price range.

YOU SHOULD KNOW…
We do our best to make sure that the information in this post is as accurate as possible as of the date it is published, but things change quickly sometimes. Hometap does not endorse or monitor any linked websites. Individual situations differ, so consult your own finance, tax or legal professional to determine what makes sense for you.

What Is a Home Warranty and Do You Need One?

bright kitchen with stainless steel appliances

Homeowners have many decisions to make — especially when it comes to protecting and preserving their home — and one of them is whether or not to purchase a home warranty. And if it’s your first home, you may be wondering, “What is a home warranty?” and even if it’s different than homeowners insurance or other coverage. You’re not alone, so we’re here to walk you through it. A home warranty is a contract that covers the maintenance costs of certain household systems and/or appliances for an established time period. Terms can vary by company, but most plans offer coverage on an annual basis.

A home warranty differs quite a bit from homeowners insurance, though the two are often conflated and are similar in the sense that they’re designed to help homeowners save money and help protect their property. Homeowners insurance, which is usually mandatory, generally safeguards against external events that can cause damage to your home — including weather-related issues, fire, or even burglary — while home warranties cover the repair or replacement of household items that may fail due to ongoing regular use. However, there are some details you should be aware of when considering home warranty companies, as one size doesn’t fit all and there is a range of coverage options and providers.

What’s Covered in a Home Warranty

There are different types of home warranty plans, including complete, appliance-only, and systems-only, so it can help to do a little research to find the right one for you. Ultimately, the major difference between the three is the type and amount of coverage you receive.

Complete (or combination) home warranties: These plans provide the most comprehensive coverage, as they cover both appliances and systems. For older homes that haven’t been recently renovated, a combination plan can provide an added layer of protection from the issues that tend to plague aging houses. While the specifics depend on the provider, the following appliances and systems are generally included in a combination plan:

Appliances:

Refrigerator
Oven, range, and cooktop
Dishwasher
Air conditioning unit
Garbage disposal
Garage door opener

Systems:

Heating/Air conditioning (central air)
Electrical
Water heater
Interior plumbing
Ductwork

Depending on the company, you may also be able to secure home warranty coverage for optional add-ons. These can include:

  • Swimming pool/hot tub
  • Septic tank and pump
  • Well pump
  • Extended electronic warranties
  • Guest dwellings
  • Roof leaks
  • Pest control

Appliance-only home warranties: As the name suggests, this type of plan offers coverage for major household appliances, including refrigerators, dishwashers, washers and dryers, ovens, ranges, built-in microwaves, and garage door openers. However, this doesn’t include any of your home’s electrical, heating, or plumbing systems.

Systems-only home warranties: Conversely, these plans address your heating, electrical, interior plumbing, and ductwork systems, but don’t include any assistance for typical appliance wear and tear. If you have an older home that’s been recently updated with modern appliances but retains some older heating or electrical systems, this type of plan might be worth considering.

The Cost of a Home Warranty

The price of a home warranty varies quite significantly depending on several factors, including type, term length, your house’s size and age, and your state or geographic area. States with the highest average home warranty premiums include New York, Alaska, Connecticut , and New Hampshire, while states with the lowest average premiums include Washington, California, and Florida.

Map of the average cost of home warranties by state

There are also various smaller costs that comprise the total cost of a home warranty plan. The typical cost breakdown includes the following:

Premium: The monthly amount you pay for your plan (the bulk of the cost).
Range: $264–$1,425, with the national average around $600

Service fee: A charge you pay each time you require a repair or replacement — or even just call a technician to your home to assess the issue.
Range: $60–$100

Coverage cap: The maximum amount of coverage your warranty company will pay for repairs and replacements.
Range: Varies widely by company, but typically $500–$1,500 per appliance or system, plus a total cap for all events within the warranty period

Cancellation fee: The charge you pay when you cancel your warranty contract before the end of the specified term. In general, you have an initial grace period of around 30 days with most home warranty companies, during which you can cancel with no penalties.
Range: Varies by company, but typically $50-$75

Many home warranty providers will also offer different tiers of their complete plans that range in coverage and provide homeowners with a few different options, so they can find one that matches their budget.

Chart showing average cost of home warranty premiums by plan type

Should I Pay for a Home Warranty?

There are several different factors you’ll want to consider when deciding whether or not it’s worth it to purchase a home warranty. For example, the age of your home and its appliances and heating/cooling systems are perhaps the most important thing to think about; the older the home, the more likely it is to need fixes.

In addition, it may be a good idea to create rough estimates of the cost of repairs/replacements for your appliances, as they can add up on top of the cost of your warranty. Or it may just make more sense to buy a warranty when you do the math and determine that the likely fixes will cost you more money out of pocket than the price of the premium and service call.

Below are the average cost ranges and repair costs for the most common appliances:

Cooktop/Range

Cost range: $100-$430
Average repair cost: $250

Dishwasher

Cost range: $100–$300
Average repair cost: $220

Garbage Disposal

Cost range: $70–$400
Average repair cost: $250

Microwave

Cost range: $50–$400
Average repair cost: $200

Oven

Cost range: $100–$400
Average repair cost: $300

Refrigerator

Cost range: $200–$500
Average repair cost: $400

Washer/Dryer

Cost range: $100–$650
Average repair cost: $300

Frequently Asked Questions About Home Warranties

What are the cons of a home warranty?

While complete warranty plans are typically quite comprehensive, you’ll want to make sure you understand the potential costs of any repairs or replacements that might not be included in your particular plan, as they can be expensive. Note that there can be stipulations regarding specific appliances that merit coverage as well — for example, only built-in microwaves are included in most warranties, and not free-standing ones. And if an appliance or system breaks because of neglect, your warranty may not cover the repair, so it pays off to stay on top of maintenance tasks.

What is a home warranty vs. homeowners insurance?

A home warranty can help handle the regular wear and tear of appliances and/or heating or cooling systems, while homeowners insurance addresses more external issues like weather or natural disasters. If you’re able to afford it, having both can ensure that you have maximum protection for the majority of the “what ifs” you want to prepare for as a homeowner.

Are home warranties expensive?

The cost of a home warranty depends on the company you choose and the level of coverage you select. There are two components: the monthly premium, which is the cost to buy the warranty, and the service call fee, which the homeowner is required to pay each time they need a repair or replacement. You should also keep in mind that each company has different coverage caps — so if the cost of necessary repairs exceeds the designated amount, you’ll need to pay for the rest out of pocket.

Is a home warranty worth it for an older home?

While the decision to buy a warranty is completely up to you, purchasing coverage for an older home can be a great idea, especially since aging appliances and systems can mean that they’re more prone to issues that require repairs.

How do I know if I have a home warranty?

If you haven’t purchased one yourself, there are a couple of different ways to find out if there is an existing home warranty for your property. The first is to find out from a previous owner whether they had one and request a copy from them. Or, if you’ve already closed on the home, you can contact the title company or the realtor who closed the home sale to check on the status of the warranty.

Though there are multiple factors to consider when deciding whether or not to obtain a home warranty, they can provide added peace of mind for homeowners who want to make sure they’re covered if and when they experience some of the unexpected issues that come along with day to day wear and tear.

YOU SHOULD KNOW…
We do our best to make sure that the information in this post is as accurate as possible as of the date it is published, but things change quickly sometimes. Hometap does not endorse or monitor any linked websites. Individual situations differ, so consult your own finance, tax or legal professional to determine what makes sense for you.

2023 Predictions: What’s Ahead in Real Estate for Homeowners

row of houses for sale

With both inflation and interest rates hitting record highs in 2022, all American consumers were affected by the increases — but aspiring homebuyers and current homeowners were especially impacted. For the former, the soaring prices were discouraging developments that forced many of them to put their dreams of homeownership on hold indefinitely, while the latter saw all-time highs in equity that presented opportunities for them to reap the benefits of home appreciation by selling or finally putting renovation plans into motion.

While these factors will continue to play a pretty significant role in 2023, the year will also likely bring the rise of more solutions that help homeowners access funding without the stress of debt. Here’s a look ahead at what we think you can expect.

Homeownership Tenure Will Increase, Allowing Homeowners to Build More Equity

Though first-time buyers may still find themselves priced out of the market as interest stays high, current homeowners who opt to stay put and delay plans to move may have an advantage. While they wait out the rate hikes, they’ll earn more equity in their current home, put a dent in their principal, and experience home price appreciation. This might put them in a more favorable place to buy down the road.

As a byproduct of the reduced incentive to sell, homeowners are more likely to focus on and achieve other financial goals in the meantime, like paying down credit card debt, making much-needed renovations on their homes, or even starting a business.

Demand for Cash-Out Refinances Will Decrease

As inflation and interest rates increase, products like home equity loans and cash-out refinances that have fees, monthly payments, and/or interest attached are becoming increasingly less appealing to homeowners. And as a potential recession looms, homeowners are taking steps to minimize unnecessary spending and reduce their expenses in order to keep debt down in any way they can. We’ll likely see products that involve taking on debt decrease in popularity as a result.

To this end, consumers are expanding their search and considering alternative financing options that may have previously been quite unfamiliar. Among these solutions are home equity investments, which allow homeowners to access their equity without taking on monthly payments or interest. This is especially true when it comes to cash-out refinances, as the primary appeal of this solution is often to secure a better rate during low-interest periods; homeowners won’t want to run the risk of losing their current rate given recent hikes.

Small Business Owners Will Explore New Solutions for Funding

Not only are homeowners feeling the strain of rising interest rates; business owners are as well. While small businesses are booming, and poised to continue growing in 2023, financing products that cater to them — like business loans and credit cards — are rapidly becoming more expensive as a result of skyrocketing rates.

With consumers tightening their spending and potentially patronizing businesses less frequently in the past year or so, business owners will likely be looking for supplemental income to stay up and running during lulls. In addition, small business owners who are also homeowners have another source of start-up funding in the form of their homes. Home equity investments allow already cash-strapped business founders to access funding without the hassle of interest or monthly payments. And with the ability to use the money for whatever they’d like, the possibilities are virtually endless — from equipment or marketing to working capital.

If you’re a homeowner who wants to make the most of your growing equity, take our five-minute quiz to see if a Hometap Investment might make sense for you.

YOU SHOULD KNOW…
The above information is for general awareness and education purposes only, and does not pertain specifically to the homeowners insurance needs of those seeking a Hometap Investment. We do our best to make sure that the information in this post is as accurate as possible as of the date it is published, but things change quickly sometimes. Hometap does not endorse or monitor any linked websites. Individual situations differ, so consult your own finance, tax or legal professional to determine what makes sense for you.

Homeowners Shell Out for Flood and Tornado Protection

Florida homes in flood water

Flood. Tornado. Wildfire. As a homeowner, none of these are words you want to hear. While home construction in areas prone to natural disasters has advanced in the past several decades to provide better protection, properties in these regions still come with significant risks. However, Americans are continuing to purchase and move to vacation homes in places like Cape Coral, North Port, and Tampa, Florida — likely due to the reasonable cost of living, low property taxes, and proximity to both water and outdoor attractions.

It’s likely that many of these buyers simply aren’t aware of the potential issues that come along with buying a home in these areas.

“…House hunters should be aware that purchasing in a disaster-prone area not only puts them and their home at risk, but their finances as well. Home values in climate-endangered places may fall in the coming years as consumers learn more about the risks to properties in these areas,” says Redfin Senior Economist Sheharyar Bokhari. In fact, nearly all second homes bought within the past two years (94%) are at high heat risk, while more than three quarters (78%) have high storm risk.

According to the results of an August 2022 Redfin survey, current homeowners in these locales are quite aware of and proactive about the threats: 71% of Florida homeowners have spent money to protect homes from climate risk, and more than half of all homeowners (58%) have. More than a third (33%) of all homeowners have also put more than $5,000 into climate-related house projects. The majority (26%) of improvements were to mitigate extreme heat, while 22% invested in steps to help minimize extreme cold, 16% took measures to prevent flooding, and 14% focused on guarding against hurricanes and other tropical storms. Among Florida homeowners, this percentage was nearly triple the national figure, at 40%. Overall, hurricane and major storm coverage actually saw the biggest increase among all homeowners since February 2021, growing from 19% to 29%.

Here are the most common types of disaster-specific coverage and how costs vary across the U.S.

Flood Insurance

Redfin’s survey found that 36% of homeowners have flood insurance, which comprises the highest portion of respondents. However, many of those with flood coverage are still underinsured overall; just 18.5% of homes located in the areas required to evacuate due to Hurricane Ian had coverage through FEMA’s National Flood Insurance program.

While the price of flood insurance is dependent on your location, the national average cost through the National Flood Insurance Program (NFIS) is $771 per year. States with the most expensive flood insurance include Vermont ($1,652/year), Connecticut ($1,504/year), Rhode Island ($1,458/year), Pennsylvania ($1,407/year), and West Virginia ($1,355/year).

Related: “How to Choose the Right Homeowners Insurance” 

Tornado Insurance

Standard homeowners insurance usually covers hail and wind damage, but not high winds or tornadoes specifically. If you live in an area that is at high risk, like the states that are part of “Tornado Alley” (generally Texas, Oklahoma, Kansas, Nebraska, Iowa, and parts of Louisiana and Colorado), you’ll want to consider purchasing windstorm insurance as part of your standard policy.

The cost of a windstorm insurance add-on depends on your particular geographic region, and has a deductible that’s a percentage of the total dwelling coverage amount, which usually ranges between one and five percent. However, in coastal areas, it can be up to ten percent. Alternatively, the deductible may be a fixed amount from around $500 to $5,000.
States with the highest premiums by windstorm deductible amount are Oklahoma, Kansas, Nebraska, and Colorado.

Fire Insurance

Most standard homeowners insurance policies have some level of coverage for fire and smoke damage, and the average cost of a policy that includes fire coverage is $1,899 per year. However, individuals in regions that are at higher risk of wildfires, like California, can pay much more than that — especially since many companies won’t provide sufficient coverage for damage in these areas. The percentage of homeowners who purchased wildfire coverage grew from 15% to 24% in the past 18 months, and homeowners insurance costs increased 10% in California alone.

It’s also important to note that there are a few different types of fire insurance: dwelling coverage, which pays to rebuild or replace the actual structure of the home, other structures coverage, which refers to buildings on the property like a shed or garage, and personal property coverage, which pays for one’s belongings inside the home like clothing and appliances. Those in fire-prone areas might want to consider purchasing an additional dwelling fire policy, which costs an average of $651 per year.

If you’re a homeowner who lives in or is planning to move to a region that’s at high risk for natural disasters and could use some extra cash to fund improvements that can help guard against potential damage to your property, take our five-minute quiz to see if a Hometap Investment might be a good fit for you.

YOU SHOULD KNOW…
We do our best to make sure that the information in this post is as accurate as possible as of the date it is published, but things change quickly sometimes. Hometap does not endorse or monitor any linked websites. Individual situations differ, so consult your own finance, tax or legal professional to determine what makes sense for you.

HEIs: A Student Loan Forgiveness Alternative?

laptop on white desk

With the average cost of a college education at $10,740 and $38,070 per year for public and private institutions respectively, and rising by the year, it’s no surprise that the typical student loan borrower owes $28,950, and more than half of all students from public institutions (55%) have student loans. Currently, national student debt totals $1.75 trillion, with individuals ages 25–34 saddled with the brunt of it; this group owes a collective $500 billion in debt.

Today, the federal student loan program consists of direct subsidized loans, which provide up to $5,500 to undergraduate students in need. For loans that were disbursed on or after July 1, 2022 and before July 1, 2023, the interest rate is 4.99%. There are also direct unsubsidized loans that don’t require financial need and provide undergraduate, graduate, and professional degree students with up to $20,500 in funding. Like the subsidized loans, the interest rate is 4.99% for undergraduate students, but is higher for graduate and professional degree students at 6.54%. In March 2020, the federal government paused student loan payments. That pause has been extended until at least January 2023.

Student Loan Forgiveness Proposed — And Blocked

On August 24, 2022, President Biden announced a planned student loan forgiveness program that cancels up to $20,000 in debt for Pell Grant recipients, which includes those with direct student loans as well as select Perkins and FFEL loans, and up to $10,000 for non-Pell Grant recipients.

There were some established criteria applicants needed to meet in order to qualify for this program, including an adjusted gross income (AGI) of less than $125,000 for individuals, and $250,000 for married couples and head-of-household. This income cap could be based on either 2020 or 2021 federal tax returns. Those who had private student loans would be ineligible. However, only 8% of student loans are private, allowing the vast majority of loan recipients to potentially take advantage of the forgiveness program as long as they met the income requirements.

In mid-October, the Department of Education published the student loan forgiveness application, which was fairly short and didn’t require any additional documents or a Federal Student Aid (FSA) ID, prompting millions of individuals with loans to apply.

However, on November 10, 2022, a federal judge in Texas struck down Biden’s forgiveness program, stating that it was illegal. This was after another legal challenge had also stopped the program in its tracks. While the Justice Department plans to appeal this ruling and hopes to provide the 16 million previously approved borrowers with expedited relief if and when the ruling is overturned, those who are in need of quicker financial assistance might be seeking ways to begin making progress toward eliminating student debt in the meantime — and even after receiving loan forgiveness if they owe more than the $10–20,000. There are also those who don’t meet the income requirements that are still in search of solutions to eliminate their student debt.

An Alternative Option to Pay Down Student Loans

If you’re a homeowner, a home equity investment (HEI) can be an ideal way to get rid of student debt depending on your personal goals and situation. Not only is it a good way to potentially take advantage of the recent record high amounts of home equity, but because there isn’t any interest or monthly payments, you can potentially pay off your own or your child’s loans more quickly than with other options. If the loan forgiveness program pushes through and you still have an outstanding balance beyond the maximum relief cap, a HEI could help pay it off. And there aren’t any restrictions on how the funds are used, so you can accomplish other financial goals like paying off credit card debt or making home repairs.

Plus, the effective period of a Hometap Investment is 10 years, giving you time to handle bigger financial priorities before beginning to pay off loans, or vice versa.

Take our five-minute quiz to see if a Hometap Investment might be a good way for you to begin eliminating student loan debt.

YOU SHOULD KNOW…

We do our best to make sure that the information in this post is as accurate as possible as of the date it is published, but things change quickly sometimes. Hometap does not endorse or monitor any linked websites. Individual situations differ, so consult your own finance, tax or legal professional to determine what makes sense for you.

Exterior Renovations Yield Highest ROI in 2022

wooden garage doors

The shift to remote work in the past few years has led many homeowners to invest in renovations and repairs inside their home, but exterior projects can just as be beneficial — if not more — for a few different reasons. When it comes to making improvements to the outside of your home, certain ones have been shown to earn you a higher return on your investment than others. A recent study broke down the top outdoor remodeling projects based on average cost and value. Here are the exterior renovations that will give you the best ROI.

Garage Door Replacement

While not the most glamorous home improvement project, replacing your garage door — especially if it’s quite old — can go a long way toward boosting resale value. Currently, the national average cost of garage door replacement is $4,041, and it can add approximately $3,769 to the value of your home, giving you a 93.3% ROI.

Manufactured Stone Veneer

This decision mainly comes down to your aesthetic preference, but replacing a portion of your vinyl siding with stone veneer can significantly boost both curb appeal and resale value.

While this project is pricier — the national average cost is $11,066 — you can make back almost as much as you put into it, as it can increase resale value by $10,109 or 91.4%.

Siding Replacement

In terms of siding replacement, your ROI largely depends on the materials you’re using. Fiber-cement siding replacement can run an average of $22,093 and earn you just over 68% back, or $15,090.

For vinyl siding, the national average cost is $18,662 and the typical ROI is $12,541 — a 67.2% return. It’s also important to note that your return for siding replacement will vary based on your geographic region; for example, vinyl siding will give you a slightly higher ROI of 68.9% in East North Central parts of the country (including Cincinnati, Cleveland, Detroit, Indianapolis, and Milwaukee) than other areas.

Window Replacement

Like siding, the amount you’ll earn back on window replacements largely depends on the material you’re using. Replacing vinyl windows averages $20,482 and can earn you up to 67.2% ($13,822) back. Also like siding, vinyl window replacement can give you even more money back in many midwestern cities, up to 68.4% in some areas compared to other parts of the country.

Wood window replacement tends to be a bit more expensive — the national average is $24,388 — and you also don’t make back quite as much as you put in (typical return on investment is $16,160, a 66.3% ROI).

Deck Addition

Adding a wood or composite deck can be a smart move, both for your own enjoyment and future resale value. A wood deck, depending on size, will run approximately $19,248 and earn you an average of 64.8% back ($12,464), while a composite deck is a bit pricier — the national average is $24,677 — and your ROI will be slightly less at 62.1%.

Steel Entry Door Replacement

Finally, investing in a new steel door, which averages $2,206, will earn you back about $1,409 or 63.8%. The exact amount will depend on specific features; the example quoted includes a dual-pane half-glass panel and aluminum threshold with composite stop.

Selling vs. Renovating

With experts predicting continued high mortgage rates, low housing inventory, and longer time on the market in 2023, it’s worth seriously considering whether or not you want to put your home on the market immediately after making renovations — or hold off and enjoy the improvements that will put you in a more favorable position to sell down the road. While your next move all depends on your own financial situation and goals, you have a lot to gain by going forward with the renovations that will bring the greatest returns on your investment.

How to Fund Exterior Renovations

There are a number of different ways to fund exterior home renovations, including renovation loans and traditional options like home equity loans, home equity lines of credit (HELOCs), and cash-out refinances. However, it’s important to keep in mind that these options involve taking on debt in addition to your regular mortgage payments, which can strain an already tight budget.

A home equity investment lets you access cash from your home equity without any interest or monthly payments. There aren’t any restrictions on how you use the money, and you have 10 years to settle the Investment through a refinance, buyout with savings, or sale of your home.

If you could use some additional funding to put toward exterior renovations on your home, take our five-minute quiz to see if a Hometap Investment might be a good fit for you.

YOU SHOULD KNOW…

We do our best to make sure that the information in this post is as accurate as possible as of the date it is published, but things change quickly sometimes. Hometap does not endorse or monitor any linked websites. Individual situations differ, so consult your own finance, tax or legal professional to determine what makes sense for you.

13 Questions with Hometap’s Information Technology Engineer

Work desk with three computer screens

Maxine, better known as “Max” here at Hometap, handles all things IT for the company — a role that comes with its fair share of challenges in a fully remote work environment.

headshot of maxine rock

CAREER HISTORY / BACKGROUND

Q1: You went to college for Japanese Studies and English. What led you to pursue a career in IT?

When I decided that staying in Japan wasn’t for me, I needed a new career path. I’ve been very fortunate to have friends in tech that allowed me to get my foot in the door at a startup. I knew that I liked helping people, and technology was something that came naturally enough to me that I figured I could make a career out of it.

Q2: You actually spent a semester studying abroad in Japan. What kind of impact did that make on you?

I think it’s really important to experience other places and people as much as you can. I’m from a very small town, and being able to travel alone and meet all kinds of new people really opened up my world view.

Q3: What’s the biggest learning from a past position that you find yourself applying at Hometap?

Everyone comes to the table with different experiences and expertise, and it’s important to remember! People can surprise you with what they know, and it’s important to always be learning whenever you can.

Q4: What’s the biggest challenge you face as an IT Engineer?

Remote working has really changed the way I work as an IT Engineer. Technology can be frustrating, and not being able to be hands on with the hardware can sometimes lead to issues taking longer to fix than they would if we were in person. The challenge has been finding innovative ways to resolve issues quickly remotely!

Q5: What’s the most rewarding part of the role?

I honestly love helping folks. When you’re trying to do your job and your tech isn’t working, it’s incredibly frustrating. I like being able to get folks back on their feet and knowing I’m helping keep the people who keep the company going, well…going!

Q6: What’s the best advice that you’ve received during your career?

It seems a bit silly, but the best advice I’ve gotten has always been that confidence and belief in yourself really do matter. I know that a lot of women in tech can relate to feelings of imposter syndrome, and I’ve been lucky to have a lot of female mentors show me just how much I can achieve if I don’t let myself get stuck in my own head!

AT HOMETAP

Q7: What led you to Hometap and appealed to you about your initial role here and the company?

An old coworker reached out to me that Hometap was hiring in IT. Initially, I wasn’t really looking for a new job, but the prospect of being able to build something here as the first IT hire was too enticing. That, on top of Hometap’s mission, convinced me it would be a good move for me.

Q8: What’s something you wish members of other teams within Hometap understood about IT or the work that you do specifically?

I wish more folks knew about the importance of information security, but we’re working on that right now! It’s sort of a cross function of IT and incredibly important when you work with the kinds of documents we do here at Hometap.

Q9: If you could trade jobs with anyone else at Hometap for a week, what position would it be?

I’m not sure if I could manage it for a whole week but I would love to hop into our Application Specialist team and help out with getting everything together for homeowner Investments. I know those folks work super hard and have to work through some pretty unique problems to make things run smoothly.

Q10: What’s one quality someone needs to be successful at Hometap?

You’re going to be successful here if you’re the kind of person who likes to ask questions! We are very collaborative and it’s important that you are investigative and want to find ways to make our processes better!

photo collage of Max Rock

OFFICE CULTURE

Q11: What qualities do you look for in a company’s office culture?

I am always looking for a place where I can engage and be engaged. If I put in energy to a culture, I want that energy to be returned and I’ve found that everyone at Hometap is just as excited as I am to participate.

Q12: You’ve been with Hometap for almost a year now. What’s one word you would use to describe the culture here so far?

Collaborative. It’s a bit cliche but I think you can ask anyone here and they’d say something similar, the people are what make Hometap so special. We have such a good group of people here dedicated to being good owners and neighbors. Whether it’s for work or personal reasons, we all work together and support one another and it’s really nice to see.

Q13: What are the best and worst parts of working from home?

The best part of working from home is getting back the time I spent commuting. I feel like I have a much better work/life balance now that I can work from home. Of course, the drawback to that is not being able to engage with my coworkers in the same way you can in an office. The worst part is trying to solve a sticky IT issue that I know would be a lot easier to fix in person!

We’re hiring! Learn more about the open career opportunities at Hometap!

9 Home Renovations and Repairs to Do Now Before Retiring

Man repairing shingles on roof

With the extra free time you may find yourself with in retirement, you may see it as a good opportunity to tackle some long-desired home improvements — especially if you’re eventually planning to put your home on the market and relocate. However, there are some repairs and renovations that can be more beneficial to complete before you retire for a couple of different reasons. First, you’ll want your home to fit your lifestyle as you age. Second, it can pay off to make the renovations that can help your home sell before you’re on a fixed income.

Here are some of the most valuable changes you can make to your home before you retire.

Move Bedrooms to the Main Floor

While transitioning to one-floor living isn’t always easy, it can pay off in the long run to do it sooner than later if you want to remain in your home after retirement. If you already live on one level, turning one of the bedrooms into a primary bedroom can help sell your home and potentially add an average of $85,672 to its value. This may include adding an ensuite bathroom, walk-in closet, or dressing room.

Add a Full Bathroom to the Main Floor

Similar to bedrooms, whether you’re planning to stay in your home or planning to sell, having a full bathroom on the main floor of the house tends to be an asset. Not only can it be helpful as you age if you’re remaining in the house, but a guest bathroom can boost the resale value considerably. If you already have a bathroom on the main floor, it may be worth considering making your tub or shower more accessible; this can be as simple as adding a railing or seat.

Replace Your Lawn Areas with Hardscape

Less grass means less lawn maintenance. Save time, money, and effort by taking a look at your lawn and (thoughtfully) eliminating portions that you can fill in with pavement, stone, wood, or concrete. Oftentimes, these changes can boost curb appeal in addition to removing the need for mowing and grass upkeep.

Repair (or Fully Remodel) Your Kitchen

It’s no secret that kitchens sell homes — so if you don’t intend to stay in your home, your kitchen is the first room you should tackle, even if you’re only making relatively minor fixes like installing a new oven. Of course, you’ll likely boost the resale value of your home considerably if you do need to undertake a top-to-bottom refresh: even a mid-range minor kitchen remodel, which averages $26,214, can add an average of $18,927 to your home’s value.

Enhance Curb Appeal

The first impression of your home can be a lasting one, so a little exterior work can go a long way — especially if you’re planning to put your home on the market. Take a look at the siding and see if it could use a refresh; while the typical cost of siding replacement is just under $20,000, it can boost your home’s resale value by more than $13,000.

Make Garage Repairs

Another fairly easy and inexpensive step that both enhances safety and boosts curb appeal is replacing your garage doors, especially if they’re outdated or especially old. You’ll get almost as much back as you put into the replacement, as the average cost of garage door replacement is $3,907 and it can increase your resale value by $3,663.

Replace Your Roof

Roof repairs and replacements can be costly — $10,850 on average for a new metal roof — but not only will many potential buyers typically be curious to know the age of the roof before they purchase a home, ensuring that the top of your house is in tip-top shape can ease your mind and give you less to worry about if you’re staying put.

Check on Essential Systems and Appliances

Along with checking on the roof, doing a full inspection of oil burners, heating systems, and any other key parts of your home’s energy components is smart not only for health and safety reasons, but can save time if you sell your house down the road since potential buyers will be alerted any issues during an inspection.

Fix Any Hazardous Floor Issues

Minimizing the safety risks in your home is always a good idea, but especially so as you age. Taking care of cracks and loose boards in your floor, ensuring that your stairs are secured and railings are properly attached to them, and securing or removing loose carpeting are all relatively quick and cost-effective repairs.

If you’re looking for ways to fund your home repairs and renovations without taking out a loan or otherwise creating debt, a home equity investment could help. Take the fit quiz to learn if a Hometap Investment may be able to help you fund the repairs and renovations you need to live more comfortably in retirement.

YOU SHOULD KNOW…
We do our best to make sure that the information in this post is as accurate as possible as of the date it is published, but things change quickly sometimes. Hometap does not endorse or monitor any linked websites. Individual situations differ, so consult your own finance, tax or legal professional to determine what makes sense for you.