Who Made the Better Decision?
Family A: Standard is the name of the game
Family A is purchasing a new home. Their homes comes with standard insulation, as one might expect. An estimate for their standard insulation is $4,000, which is part of the $250,000 they are paying. With the standard insulation installed, the average energy costs for similar homes is $280 per month.
Monthly Mortgage Payment for $250,000
30 year 6.25%, fixed: $1,539.29
Monthly energy bill: $ 280.00
Total Monthly Cost: $1,819.29
Family B: A New View
Family B is also purchasing a new home with the same floor plan as Family A. However, they have asked the builder to use spray foam insulation at a cost of $12,000 (an upcharge of $8,000 over standard insulation). This decision increases their home price to $258,000. But, they know their utility bills will be at least 40% lower.
Monthly Mortgage Payment for $258,000
30 year 6.25%, fixed: $1,588.55
Monthly energy bill: $ 168.00
Total Monthly Cost: $1,756.55
The Final Verdict
Even though Family B has a higher mortgage payment, they are saving $62.74 each month. That is a savings of $752.88 per year and $22,586.40 over 30 years. The savings never stop. As energy prices continue to rise the savings will be even greater.