If starting your A/C is a yearly gamble, consider using your home’s equity to add value and comfort
Most homeowners face “the moment of truth” every early spring when temperatures start to warm.
They stand nervously by the thermostat, now set to “A/C on” mode, and they wait.
Will they hear the unit kick on and air start to flow through the home’s air ducts?
Will cool air come out of the vents?
Or will nothing happen and thoughts turn to expensive repair bills or nearly out-of-reach system replacement? It’s nerve-racking!
At One Hour Heating and Air, it pains us to hear stories like this from our customers. We understand that some HVAC repairs, and certainly total replacement, can be an expensive endeavor, even with the low service call rates and manufacturer rebates that we can offer. There are a variety of ways you can invest in your home’s value and day-to-day comfort without stretching yourself thin now or maxing out a credit card.
First you need to decide if you’re going to repair your system, or replace it.
Reasons you may want to REPAIR your A/C system:
- Cost: Obvious, right? It is the primary concern for most homeowners. The key here is forecasting if the repair will add years to your system’s service life, or simply be a seasonal fix (like replacing coolant). In many cases, paying for a new part that can keep your system humming for another several years, while perhaps a couple hundred dollars on the day, is a good investment and worth repair over replacement at that time.
- Condition: What is the general condition of your air conditioner? Do you have one component that has broken, but the rest of the unit is in good working order? If so, repairing it is a good plan. In general, HVAC systems last about 10-15 years, so keep that in mind when weighing the benefit of a repair cost. Most times, repairing a unit that is under five years old makes sense.
- Time left in home: This is about return on investment and how much value you will truly get back if you put in an entirely new HVAC system. Do you plan to live in your home (and enjoy the benefits of the system) for the entire payback period? If not, repairing the unit for a fraction of the cost (even if the fix is seasonal) can be a smarter financial move.
- The 50% rule: This is pretty straightforward; if the repair costs less than 50% of the HVAC system’s total current value, then repair may be the way to go.
Reasons you may want to REPLACE your A/C system:
- Age: This is not unlike the “condition” consideration in repairing your unit. If your system falls within the 10 to 15+ year life expectancy range, consider that replacement with a newer model will offer substantial energy savings due to their higher SEER requirements.
- SEER stands for Seasonal Energy Efficiency Ratio. This is the ratio of the cooling output of an air conditioner over a typical cooling season, divided by the energy it uses in Watt-Hours. It may also be called a Seasonal Energy Efficiency Rating. A SEER ratio is calculated over an entire cooling season using a constant indoor temperature and a variety of outdoor temperatures ranging from 60 degrees to 100 plus. This is how it simulates a typical season. The higher the SEER, the more energy efficient the unit.
- Air quality and humidity: If you repair your A/C, will it improve your home’s air quality? That’s an important question to ask yourself. If you shore up one worn component, but your aging system still slowly leaks in other places like duct work and coils, it can leave air quality the same as it was before that singular repair. Additionally, an efficient A/C unit controls the humidity level in a home, which directly impacts mold reduction and mildew growth. (How do you know, you may ask? If your skin feels clammy indoors and there’s a general damp or “muggy” feel in the home, the humidity is too high. If you notice a lot of static electricity and dry skin in colder months, it’s too low.)
- Tax credits and rebates: Let’s say you’re smack in the middle of your system’s life span, the repair is close to the 50% rule, and you’ve made at least one other repair in that time. This might have some homeowners “on the fence” when faced with the expense of a new system. One other consideration toward replacement at this point would be the potential for tax credits and rebates through local, state, and federal energy agencies. In some cases, these can equal hundreds of dollars in one-time rebates or annual savings on your taxes. You can learn more about energy efficiency savings at EnergyStar.gov. These offers vary by region and your local One Hour Heating and Air experts can tell you exactly what savings are available to you based on where you live.
- Warranties: Once you get past one or two repairs and you’ve considered the life span and ROI of your existing unit, factor in that investing in a new system will also bring with it a warranty that can help control repair costs for the next several years. An aging unit increases in unexpected costs, while a system still under warranty offers some stability in expected expense for the duration of that warranty period.
How can you PAY for a new A/C system?
1. Let your house pay for it: For most families, their house is their biggest asset and it tends to gain value over time. The difference between what is still owed on the house and what the current market values it is called the home’s “equity”. You can borrow against that equity to help cover the cost of a new HVAC system. You may hear this type of loan referred to as a “second mortgage”. You are essentially investing the home’s own gains back into its value. When you sell someday, a new HVAC system can increase your asking price and interest by potential buyers. The loan is for the amount of the HVAC system and you pay it back over time in conjunction with your monthly mortgage payment. The loan, which uses your home as collateral, normally comes with a fixed interest rate and payments are the same amount for a set period of time.
2. Home Equity Line of Credit (HELOC): Similar to the home equity loan in #1, a HELOC also uses your home as collateral, but instead of using only the amount you need for the HVAC system, it’s a line of credit that equals 75-80% of your equity and is open-ended. Meaning, there is a maximum amount that is approved and made available by the lender and you can draw from it for various needs. The loan usually comes with a variable interest rate, which means your monthly pay-back amount can increase over time.
In both of these cases, if you default on the loan, the bank could foreclose on your home.
3. HVAC company financing: Most HVAC companies offer financing of their own and the incentive here is that the money is often made available much faster than going through a bank for an equity-based loan. The HVAC companies partner with outside, third-party lenders to make the money available. This option does not use your house as collateral, but usually requires a strong credit score to get the best terms in interest rate and payback schedule. We feel this is a great spot to remind you that at One Hour Heating and Air, we offer several financing options for just about every budget and desired payback schedule. We make it our goal to provide a safe, reliable, and affordable comfort system to every customer.
4. Government Loans: These federal and state loans are available based on factors such as income level and where you live. Unlike home equity loans and third-party lenders, these loans can sometimes have interest rates as low as 0%. If you’re planning to install an EnergyStar-qualified HVAC system, you may want to apply for the Federal Housing Administration’s PowerSaver loan program, which is specifically for home improvements that increase energy-efficiency.
Can One Hour Heating and Air help you make the best decision?
When our certified, skilled, and insured technician comes to your home, he or she can assess any needed repair, taking into account all of the factors discussed in this article, and help you make the most cost-effective decision. It’s also important to schedule routine seasonal inspections to stay ahead of any repairs and catch potential problems in their earliest, least expensive stage.
Our comprehensive inspection covers:
- Condenser coil cleaning
- Electrical Connections tightening and cleaning
- Refrigerant levels checked
- Contacts & condensation lines checked
- Thermostat checked and calibrated
- Air filters checked
- It’s important to note here that this is something you can do easily and inexpensively every three months to ensure your system is circulating well and keeping your air quality at a healthy level year round.
If you want to read more about what our seasonal inspection includes, click here.
One Hour Heating and Air is standing by to address any issue with your system and keep your family comfortable, safe, and healthy all year round. If it’s time to replace an aging system, we can also provide financing options that will make heating and cooling your home more affordable. Our professionals are your go-to HVAC team in Charlotte and the surrounding area, including Indian Trail, Concord, and Mooresville.
Visit www.onehourac.com for our weekly and monthly specials.
Call our 24/7 customer service line today 704-251-0610.