Home for Sale: Close to Multnomah Village

$329,900
7330 SW Kelsi Ct.
Portland, OR

Convenient location close to Multnomah Village, Gabriel Park. Garden Home but Washington Cty taxes. 4br/2.5ba. House is in great condition with a private, fenced backyard on small private road close to everything. Don't miss out on this opportunity to own so much for a great price close in SW.
For more information go to realtysolutionspdx.com

Home owners Insurance: Time for an Annual Check-Up

Article From Houselogic.com
By: G_M Filisko
Published: 28, 2009

An annual check-up on your homeowners insurance can result in a healthier policy and a healthier pocketbook.

It's time for your annual check-up. The good news is that for this one, you won't have to don one of those revealing hospital gowns-and you may walk away with a healthier pocketbook. We're talking about a homeowners insurance check-up, a task you should complete once a year, ideally around renewal time. This will ensure your policy still provides the right level of coverage for your family, and your premium isn't costing you more than it should.

Remember, homeowners insurance is essential. The coverage is designed to protect your home and its contents, as well as shield you from liability for accidents and such on your property. Block out an hour of your time, call an insurance agent, and get answers to these three important questions.


WHAT TYPE OF COVERAGE DO I HAVE?
The most effective type of coverage is known as "replacement cost," which covers, up to your policy limits, what it would take today to rebuild your house and restore your belongings, says Jerry Oshinsky, a partner at Jenner & Block in Los Angeles who has represented homeowners in litigation against insurers.

"Extended" replacement cost coverage provides protection to your policy limit, say $500,000, and then perhaps another 20% of the cost after that. Percentages vary, but in this example you could recoup up to $600,000 on a $500,000 policy, assuming your losses reach that high. Extended coverage can compensate for any unanticipated expenses like spikes in construction costs between policy renewals. Now harder to find due to the industry shift toward extended replacement coverage, "full" or "guaranteed" replacement coverage covers an entire claim regardless of policy limits.

A less attractive alternative is "actual cash value" coverage that usually takes into account depreciation, the decrease in value due to age and wear. With this type of policy, the $2,000 flat-screen TV you bought two years ago will be worth hundreds of dollars less today in the eyes of your claims adjuster. Kevin Foley, an independent insurance broker in Milltown, N.J., favors replacement cost coverage unless you can save at least 25% on the premium for going with actual cash value coverage instead.

Even if you have replacement cost protection for your dwelling and personal property, don't assume everything is covered. Structures other than your home on your property-such as a detached garage or swimming pool-require separate coverage. So too do luxury items like jewelry, watches, and furs if you want full replacement cost because reimbursement for those items is typically capped.

HOW MUCH COVERAGE DO I REALLY NEED?
OK, now that you're clear on what type of policy you have, you need to figure out how much policy(http://www.houselogic.com/articles/homeowners-insurance-are-you-over-or-underinsured/) you truly require in dollar terms. Let's say you purchased your home five years ago and insured it for $200,000. Today, it's worth $225,000. Simply increasing your coverage to $225,000 may nonetheless leave you under-insured. Here's why.

The key to determining how much dwelling coverage you need isn't the value of your home but the money you'd have to pay to rebuild it from scratch, says Carlos Aguirre, an agent for Liberty Mutual Insurance in Arlington, Texas. Call your local contractors' or home builders' association and inquire about the average per-square-foot construction cost in your area. If it's $150 and your home is 2,000 square feet, then you should be insured for $300,000.

There's no rule of thumb for how much your homeowners insurance should cost. Insurers use numerous factors-age, education level, creditworthiness-to determine pricing, so the same policy could run you more than your neighbor. In recent years the average annual premium(http://www.iii.org/media/facts/statsbyissue/homeowners/) was $804. Oshinsky advises against scrimping on insurance because big increases in coverage probably cost less than you'd think. He recently purchased a liability policy that cost $250 for the first $1 million in coverage. Adding another $1 million increased his premiums only $12.50 more.

HOW CAN I LOWER MY PREMIUMS?
The higher your deductible, the amount you pay out of pocket before coverage kicks in, the lower your premium. Landing on the appropriate deductible level requires remembering that insurance should cover major calamities(http://www.houselogic.com/articles/homeowners-insurance-to-claim-or-not-to-claim/), not minor incidents, says Foley, the independent insurance broker. Most homeowners should be able to absorb modest losses like a broken window pane or a hole in the drywall without filing claims. If you can, then you're wasting money with a $250 deductible.

Foley's rule: If you're a first-time homeowner and don't have a lot of savings, moving up to a $500 deductible will probably stretch your budget. However, if you live in a ritzy home and drive an expensive car, then you should be able to afford a $1,000 deductible. In Milltown, N.J., for example, the premium for a $200,000 home with a $500 deductible would be $736, according to Foley; moving up to a $1,000 deductible drops the annual premium to $672. That's $64 in savings.

Every major insurer offers discounts to various groups, such as university employees or firefighters. Figure about 5%. Ask which affiliations would entitle you to a discount and how much. If an AARP membership would result in a $50 savings, pay the $16 dues and pocket the $36 difference. Many insurers also offer discounts ranging from 1% to 10% or more for installing protective devices like alarms and deadbolt locks, for going claim-free for an extended period, or for insuring both your car and your home with the same carrier.

G.M. Filisko is an attorney and award-winning writer who has been involved in insurance litigation. A frequent contributor to many national publications including Consumers Digest, Bankrate.com, REALTOR(R) Magazine, and the American Bar Association Journal, she specializes in real estate, personal finance, and legal topics.

Reprinted from HouseLogic (houselogic.com) with permission of the NATIONAL ASSOCIATION OF REALTORS (R).
Copyright 2010. All rights reserved.

December 2009 Market Stats

Evaluate Your Adustable Rate Mortgage

Article From Houselogic.com
By: Barbara Eisner Bayer
Published: 28, 2009

If you have an adjustable-rate mortgage, be sure to investigate your loan options well before the rate on your ARM resets.

An adjustable-rate mortgage, or ARM for short, is attractive to homeowners because the introductory interest rate is often lower than rates on traditional fixed-rate loans. That translates into lower monthly payments. ARMs can make sense if you plan to sell your home or refinance your mortgage before the introductory rate expires.

Just keep in mind that there's no guarantee you can sell or refinance in time, especially if real estate markets are depressed or the lending environment is tight. If you're a current homeowner with an ARM, look into your loan options long before the rate resets. A day spent investigating alternatives could save you thousands.

GET TO KNOW YOUR ARM
Review your ARM's original paperwork to familiarize yourself with the conditions of the loan. Focus on these four areas as you go through the documents.

Index: Lenders use a widely followed index as the basis for the interest rate you pay on an ARM. A common index is the London Interbank Offered Rate(http://www.investopedia.com/terms/l/libor.asp), or LIBOR, the rate major world banks charge each other for loans.

Margin: This is the percentage you pay above or (rarely) below an index. "LIBOR plus 2," for example, means you'll pay an interest rate two percentage points above LIBOR. If LIBOR is 4% and your margin is 2%, then your mortgage rate is 6%.

Interest Rate Cap: This limits the amount your rate can increase in a given timeframe. Periodic caps govern how much your rate can increase from one period to the next, such as from year to year. Lifetime caps set the maximum amount the rate can rise above the introductory rate during the loan's duration.

Adjustment Period: This is how frequently your rate changes.

Once you understand the terms of your ARM, think about how long you plan to live in your home. If it's less than five years, then you may benefit from refinancing into another ARM. If you hope to stay in your house for the long haul, a fixed-rate mortgage may be a better deal for you.

EVALUATE YOUR REFINANCING OPTIONS
Now it's time to consider what actions to take before your ARM resets to a higher interest rate. Start by determining your monthly payment once your introductory rate expires. An online ARM calculator(http://www.dinkytown.net/java/MortgageAdjustable.html) can help. If you can handle the new payment, then your job is done. But if it's more than you can afford, explore alternatives.

A common tactic is to refinance into a loan with a lower monthly payment. Look into 15- or 30-year fixed-rate mortgages, since the payments will be steady and predictable. Also explore a new ARM, such as a 5/1 ARM, which can also have a 30-year term but offers a low fixed rate for five years before resetting in the sixth year. Use the worksheet on(http://www.federalreserve.gov/pubs/arms/checklist_english.htm) to keep track of loan terms and compare mortgages, both adjustable and fixed, to each other.

Let's say you need to refinance a $200,000 loan for 30 years. According to the U.S. Federal Reserve(http://www.federalreserve.gov/pubs/arms/arms_english.htm), a 30-year fixed-rate mortgage at 6% interest will cost you $1,199 a month. If you refinance into a 5/1 ARM with an introductory 4% rate, monthly payments for the first five years will be $955. Saving $244 a month--or about $14,640 over five years--sounds hard to beat, right?

The problem is, the monthly ARM payment can increase starting in the sixth year. Assuming the periodic rate cap is 2%, the rate may rise to as high as 6% in Year 6. At that point, your payment would go up to $1,166, which is still $33 less than the 30-year fixed. In Year 7, though, you could get hit with another 2% rate increase. That would bump your payment up to $1,390, or $191 more than the fixed-rate amount.

It can get worse if you're living in a rising-interest-rate environment. If the lifetime cap on your loan is 8%, your rate could eventually be as high as 12%--the introductory 4% plus 8%--yielding a monthly payment as high as $1,865. That's nearly double the introductory payment. Suddenly, that $1,199 payment on a 30-year fixed looks pretty good if you're planning to own your home for a long time. If you plan to sell within five years, the ARM is a better choice.

FACE THE REALITIES OF REFINANCING
Refinancing an ARM isn't free, so take into consideration closing costs and breakeven points. You might save $200 a month with a refinance, but if the upfront costs are, say, 5% ($10,000 on a $200,000 loan), you wouldn't break even for a full 50 months. The Federal Reserve says typical closing costs on a refinance range between 3% and 6%. Also make sure there's no prepayment penalty on your ARM, or you might find yourself eating that cost as well.

As you evaluate your options, be realistic about the future. Is your job secure? Will late payments or too much debt hurt your credit score? Could lending markets turn so tough that even borrowers with outstanding credit can't get loans? These scenarios might prevent refinancing indefinitely.

Take safeguards just in case you find yourself on the losing end of an ARM gamble. Start by setting aside a portion of the money you're saving on an ARM during the introductory period. That way, if the ARM resets before you can refinance, you can use the savings to pay down your principal. That should lower your monthly payment, even with a higher interest rate. When needed, cut expenses or generate extra income to eat away at your loan balance.

Accept the fact that you may have to sell your property. Use the proceeds to purchase a less expensive home, or rent until you're in a better financial position. If you absolutely can't meet your monthly payments, and you can't sell, then talk to your lender about a loan modification(http://www.houselogic.com/articles/making-home-affordable-modification-option/).

Barbara Eisner Bayer has written about mortgages and personal finance for the past 15 years for Daily Plan-It, Motley Fool, and Nurse Village, and is the former Managing Editor of Mortgageloan.com and Credit-land.com. She enjoys the flexibility of adjustable-rate products, but is temperamentally a fixed-rate kinda gal.

Reprinted from HouseLogic (houselogic.com) with permission of the NATIONAL ASSOCIATION OF REALTORS (R).
Copyright 2010. All rights reserved.

Conduct Your Own Energy Audit

Article From Houselogic.com
By: Jane Hodges
Published: 28, 2009

A do-it-yourself energy audit can teach you how to be more energy efficient and make you a more-educated consumer should you decide to hire an expert.

Self-starters don't necessarily need a pro to assess their home's energy deficiencies. With a little elbow grease and one of several free do-it-yourself guides to home energy auditing, you can get a good sense of where your home is leaking hot and cool air, and how your choice of appliances and your energy use contributes to energy loss.


WHAT YOU'LL SAVE ON FIXES
By following up on problems, you can lower energy bills by 5% to 30% annually, according to the U.S. Department of Energy's office of Energy Efficiency and Renewable Energy(http://www.eere.energy.gov). With annual energy bills averaging $2,200, according to Energy Star(http://www.energystar.gov), investing in fixes or energy-efficient replacement products could save you up to $660 within a year.
And self-audits can cost virtually nothing if you already own a flashlight, ladder, measuring stick, candles, eye protection, work clothes, dust mask, and a screwdriver-or roughly $150 if you're starting from scratch. As for time commitment, expect to spend two to four hours to investigate home systems, refer to utility bills, and conduct research about local norms for products, such as insulation, say experts.

TYPES OF DIY AUDITS
Since there are a variety of ways to conduct a do-it-yourself audit, you'll need to know your tolerance for the tasks involved. Some require you play home inspector, climbing into attics and crawlspaces on fact-finding missions and delving into unfinished portions of your home to look at duct work. Questionnaire-based audits rely the assumption that you can answer such questions as how many gallons of water your toilet tank holds to the R-value (thickness) of insulation in your home.

If you don't have time to familiarize yourself with your home's systems or confidence about diagnosing problems, are disabled, are squeamish on ladders and in crawlspaces, or are already planning to invest in a major remodel, you may benefit from hiring a pro(http://www.houselogic.com/articles/paid-energy-audits-the-costs-and-benefits/).
Even homeowners who complete a self-audit often hire a professional to double-check their diagnoses. A self-audit may reveal drafts but not their exact source, such as ducts or insulation, for instance. Because the costs to address a draft can range from minor to major, investing in a paid audit may be justifiable.

WHAT SHOULD YOU CHECK?
All the home systems and appliances that contribute to energy costs. Here's the breakdown of a typical home's energy usage that Energy Star references:
* Heating (29%)
* Cooling (17%)
* Water heating (14%)
* Appliances (13%)
* Lighting (12%)
* Computers and electronics (4%)
* Other (11%)

SELF-AUDITS HONE IN ON DETAILS PROS MAY NOT
While the pros use special equipment to focus on hard-to-research aspects of a home's building envelope and indoor air circulation, DIY audits can teach you-based on the questions they ask-to identify and address the numerous small ways in which your home wastes energy.
Since lighting, electronics, and appliances collectively account for nearly 30% of the average home's energy costs, you can make an impact on your bills by replacing old appliances with energy-efficient replacements and simple fixes-plugging appliances into power strips versus wall outlets, making sure refrigerator doors are properly sealed and don't leak air, and opting for a programmable thermostat.

HOW TO SPOT COMMON ENERGY LEAKS
1. Check your home's exterior envelope-the windows, doors, walls, and roof exposed to outdoor air. Hold a candle or stick of incense near windows, doors, electrical outlets, range hoods, plumbing and ceiling fixtures, attic hatches, and ceiling fans in bathrooms. When smoke blows, you've got a draft from a source that may need caulking, sealant, weather stripping, or insulation.

2. Check insulation R-value or thickness. Where insulation is exposed (in an attic, unfinished basement, or around ducts, water heaters, and appliances), use a ruler to measure, recommends the DOE. Compare your results against those suggested for your region via an insulation calculator(http://www.ornl.gov/~roofs/Zip/ZipHome.html).
Although examining in-wall insulation is difficult, you can remove electrical outlet covers, turn off electricity, and probe inside the wall, the DOE notes in its DIY audit guide. However, only a professional's thermographic scan can reveal if insulation coverage is consistent within a wall. Insulation can settle or may not be uniformly installed.

3. Look for stains on insulation. These often indicate air leaks from a hole behind the insulation, such as a duct hole or crack in an exterior wall.

4. Inspect exposed ducts. They may not work efficiently if they're dirty, have small holes, or if they pass through unfinished portions of the home and aren't insulated. Look for obvious holes and whether intersections of duct pipe are joined correctly. Since ducts are typically made out of thin metal that easily conducts heat, uninsulated or poorly insulated ducts in unconditioned spaces can lose 10% to 30% of the energy used to heat and cool your home, says DOE.

WHEN SHOULD A PROFESSIONAL MAKE REPAIRS?
The DOE recommends calling a contractor before insulating ducts in basements or crawlspaces, as doing so will make these spaces cooler and could impact other home systems, such as water pipes. Plus, these ducts might release noxious air. DOE also recommends you hire professionals to clean ducts periodically. If you've noticed that some rooms get disproportionately hot or cold, bring that to a pro's attention. It could be duct related.

In addition, some DIY audits-like the City of Seattle's free online audit guide(http://www.seattle.gov/light/printdocs/DoItYourselfHome.pdf), suggest hiring a pro if you suspect asbestos materials have been used in insulation or around pipes, ducts, or heating equipment. Airborne or crumbling asbestos particles are a health hazard. And a pro might be the right choice when dealing with insulation around or near electrical or examining electrical systems with bare wires.

A self-audit, like a paid audit, serves as a jumping-off point to help you set priorities(http://www.houselogic.com/articles/prioritize-tasks-after-an-energy-audit/) for making your home more efficient. Whether or not you choose to make repairs yourself, one thing's for sure: You'll come away knowing more about your home's strengths and weaknesses than you did before.

Jane Hodges has written about real estate for more than half of her 16-year journalism career, for publications including MSNBC.com, Seattle Magazine, The Seattle Times, and The Wall Street Journal. In 2007 she won a Bivins Fellowship from the National Association of Real Estate Editors to pursue a book on women and real estate. Her work has also appeared in The New York Times, CBS's BNET, and Fortune. She lives in Seattle in a 1966 raised rancher with an excellent retro granite fireplace. Latest home project: remodeling a basement bathroom.

Reprinted from HouseLogic (houselogic.com) with permission of the NATIONAL ASSOCIATION OF REALTORS (R).
Copyright 2009. All rights reserved.

Cleaning and Caring for Siding

Article From Houselogic.com
By: John Riha
Published: 31, 2009

The annual cleaning and repair of your home's exterior will pay off in a long life and increased value.

If you'd like to prevent costly home repairs and add to the value of your house, clean your siding. With proper care and a little regular maintenance, your home's exterior could be trouble-free for 50 years and more. Cleaning removes dirt and mildew that may shorten the life of your siding. A clean house protects your investment, too. "A good first appearance on a home can add as much as 5% to 10% to the value of the home," says John Aust, a past president of the National Association of Real Estate Appraisers.


CLEANING WOOD, VINYL, METAL, STUCCO, BRICK, FIBER-CEMENT SIDING

All types of siding benefit from a good cleaning once every year to remove grit, grime, and mildew. The best way-whether you have wood, vinyl, metal, stucco, brick, or fiber-cement-is with a bucket of warm, soapy water (1/2 cup trisodium phosphate-TSP, available at grocery stores, hardware stores, and home improvement centers-dissolved in 1 gallon of water) and a soft-bristled brush attached to a long handle. Divide your house into 20-foot sections, clean each from top to bottom, and rinse. For two-story homes, you'll be using a ladder, so keep safety foremost.

Cleaning an average-sized house may take you and a friend every bit of a weekend. If you don't have the time-or the inclination-you can have your house professionally cleaned for $300-$500. A professional team will use a power washer and take less than a day.
You can rent a power washer to do the job yourself for about $75 per day, but beware if you don't have experience with the tool. Power washers force water through a nozzle at high pressure, resulting in water blasts that can strip paint, gouge softwoods, loosen caulk, and eat through mortar. Also, the tool can force water under horizontal lap joints, resulting in moisture accumulating behind the siding. A siding professional has the expertise to prevent water penetration at joints, seams around windows and doors, and electrical fixtures.


INSPECT FOR DAMAGE

Right before you clean is the ideal time to inspect your house for signs of damage or wear and tear. A house exterior is most vulnerable to water infiltration where siding butts against windows, doors, and corner moldings, says Frank Lesh, a professional house inspector in Chicago and past president of the American Society of Home Inspectors(http://www.ashi.org). For all types of siding, look for caulk that has cracked due to age or has pulled away from adjacent surfaces, leaving gaps. Reapply a color-matched exterior caulk during dry days with temperatures in excess of 65 degrees F for maximum adhesion.

Other defects include wood siding with chipped or peeling paint, and cracked boards and trim. If you have a stucco exterior, be on the lookout for cracks and chips. For brick, look for crumbling mortar joints. Repair defects before cleaning. The sooner you make repairs, the better you protect your house from moisture infiltration that can lead to dry rot and mold forming inside your walls.


REPAIR WOOD, VINYL, AND FIBER-CEMENT SIDING

Damage to wood, vinyl, and fiber-cement horizontal lap siding often occurs because of everyday accidents-being struck by sticks and stones thrown from a lawn mower, or from objects like baseballs. Repairing horizontal lap siding requires the expertise to remove the damaged siding while leaving surrounding siding intact. Unless you have the skills, hire a professional carpenter or siding contractor. Expect to pay $200-$300 to replace one or two damaged siding panels or pieces of wood clapboard.


REPAINT WOOD, FIBER-CEMENT

Houses with wood siding should be repainted every five years, or as soon as the paint finish begins to deteriorate. A professional crew will paint a two-story, 2,300 square foot house for $3,000-$5,000. If you've cleaned your house exterior yourself, you've done much of the prep work and will save the added cost that a painting contractor would charge to clean the siding before painting.

Fiber-cement siding, whether it comes with a factory-applied color finish or is conventionally painted, requires repainting far less often (every 8-10 years) than wood siding. That's because fiber-cement is dimensionally stable and, unlike wood, doesn't expand and contract with changes in humidity.

It's a good idea to specify top-quality paint. Because only 15% to 20% of the total cost of repainting your house is for materials, using a top-quality paint will add only a nominal amount-about $200-to the job. However, the best paints will outperform "ordinary" paints by several years, saving you money.


REPAIR BRICK MORTAR, STOP EFFLORESCENCE

Crumbling and loose mortar should be removed with a cold chisel and repaired with fresh mortar-a process called repointing. An experienced do-it-your-selfer can repoint mortar joints between bricks, but the process is time-consuming. Depending on the size of the mortar joints (thinner joints are more difficult), a masonry professional will repoint brick siding for $5-$20 per square foot.

Efflorescence-the powdery white residue that sometimes appears on brick and stone surfaces-is the result of soluble salts in the masonry or grout being leached out by moisture, probably indicating the masonry and grout was never sealed correctly. Remove efflorescence by scrubbing it with water and white vinegar mixed in a 50/50 solution and a stiff bristle brush. As soon as the surface is clear and dry, seal it with a quality masonry sealer to prevent further leaching.

Persistent efflorescence may indicate a moisture problem behind the masonry. Consult a professional building or masonry contractor.


REMOVE MILDEW FROM ALL TYPES OF SIDING

Stubborn black spotty stains are probably mildew. Dab the area with a little diluted bleach-if the black disappears, it's mildew. Clean the area with a solution of one part bleach to four parts water. Wear eye protection and protect plants from splashes. Rinse thoroughly with clean water.


REPAIR CRACKED STUCCO

Seal cracks and small holes with color-matched exterior acrylic caulk. Try pressing sand into the surface of wet caulk to match the texture of the surrounding stucco. Paint the repair to match.
Take time to inspect and clean your house siding, and you'll be rewarded with a trouble-free exterior.

John Riha has written six books on home improvement and hundreds of articles on home-related topics. Riha has been a residential builder, the editorial director of the Black & Decker Home Improvement Library, and the executive editor of Better Homes and Gardens magazine. His standard 1968 suburban house has been an ongoing source of maintenance experience.

Reprinted from HouseLogic (houselogic.com) with permission of the NATIONAL ASSOCIATION OF REALTORS (R).
Copyright 2009. All rights reserved.

Tax Credits for Solar Water Heaters

Article From Houselogic.com
By: Donna Fuscaldo
Published: 22, 2009

A federal tax credit makes energy-efficient solar water heaters a more affordable and sustainable option for many homeowners.

A solar water heater uses the renewable thermal energy produced by the sun to warm water for your shower, washing machine, and dishwasher. Better yet, it does it at a fraction of the price of a conventional storage tank water heater. If you take the plunge and purchase a solar water heater, expect to see your home's water-heating bill cut in half.

The financial attraction doesn't end there. A federal energy tax credit that's available through the end of 2016 allows homeowners to shave 30% off the cost of a system. Even new homes and second homes qualify.


HOW SOLAR WATER HEATERS WORK
Solar water heaters operate(http://www.energystar.gov/index.cfm?c=solar_wheat.pr_how_it_works) in one of two ways: either as a direct system or as an indirect system. A direct system warms water by circulating it via pipes through rooftop solar collectors. An indirect system, also known as a closed-loop system, relies on a non-freezing heat transfer liquid.

The liquid is heated in the solar collectors and returns through pipes to a storage tank, where a heat exchanger inside the tank transfers the heat to the water. Most systems rely on electric pumps to move water (or a transfer liquid) between the storage tank and the rooftop solar collectors.

In general, solar water heaters can be used anywhere as long as your roof gets direct sunlight for most of the day. The rooftop collectors should face south. A direct system makes sense in warm climates where temperatures don't fall below freezing. The non-freezing liquid used in an indirect system makes it better suited for cold climates.

You'll need to retain your conventional water heater as a back-up at night, on cloudy days, or anytime a solar water heater's capacity is exceeded. An average person uses about 15 to 20 gallons of water per day, so a family of four would likely need an 80-gallon water heater tank.

THE COST OF A SOLAR WATER HEATER
A solar water heater starts at around $4,000 including installation, though the price tag could double depending on the size, quality, and complexity of the system. Figure it'll take two to four days to install.

There's no cap on the 30% federal tax credit, which applies to systems placed in service between Jan. 1, 2009, and Dec. 31, 2016. Solar water heaters must be certified by the Solar Rating & Certification Corp.(http://www.solar-rating.org/) to qualify. States may offer additional incentives. Check the DSIRE database(http://www.dsireusa.org/).

To earn the federal tax credit, at least half of your household's energy for water heating must come from the sun. You can only count money spent on the solar water heater, not the entire heating system. You can't claim the credit if the solar water heater is for a pool or hot tub.

Take the credit on IRS Form 5695 for the year you install the solar water heater. Remember to save receipts and manufacturer certification statements(http://energystar.custhelp.com/cgi-bin/energystar.cfg/php/enduser/std_adp.php?p_faqid=5781&p_created=1242655831&p_sid=1TQbivKj&p_accessibility=0&p_redirect=&p_lva=2873&p_sp=cF9zcmNoPTEmcF9zb3J0X2J5PSZwX2dyaWRzb3J0PSZwX3Jvd19jbnQ9OTMsOTMmcF9wcm9kcz0wJnBfY2F0cz0mcF9wdj0mcF9jdj0mcF9wYWdlPTEmcF9zZWFyY2hfdGV4dD1tYW51ZmFjdHVyZXJzIGNlcnRpZmljYXRpb24gc3RhdGVtZW50Jw**&p_li=&p_topview=1). The credit can't exceed the total amount you owed in federal taxes for the year.

THE SAVINGS CAN ADD UP
According to Energy Star, a federal program that promotes energy efficiency, a solar water heater can lower the average household's water-heating costs(http://www.energystar.gov/index.cfm?c=solar_wheat.pr_savings_benefits) by 50%. If you use a gas water heater, that translates to savings of $190 a year. You'll save $265 annually if you have an electric water heater.

Savings are greater for large families that use a lot of hot water. How quickly you recoup your total investment depends on how much water you use, the amount of sun you get, the performance of your solar water heater, and how much it costs to heat up your water using your existing system.

If you're building a new home or refinancing your mortgage, consider lumping in the cost of a solar water heater with the loan. By spreading the cost(http://www.energysavers.gov/your_home/water_heating/index.cfm/mytopic=12860) of the system over the life of your mortgage, you can take advantage of the tax deduction(http://www.houselogic.com/articles/deduct-interest-home-equity-loans/) for mortgage interest.

According to the U.S. Department of Energy, you'll pay an extra $13 to $20 per month to include the cost of a solar water heater in a 30-year mortgage. With the mortgage interest deduction that cost gets reduced by $3 to $5. The difference is about what you should save on your monthly energy bills.

LONG LIFE, LITTLE TLC
Solar water heaters have a life expectancy of 20 years or more, double that of conventional storage tank water heaters. They typically don't require replacement parts for the first 10 years. It's prudent to hire a qualified contractor to conduct annual inspections, as you might do with a furnace.

You can do your part by making sure the collector is clean, sealings aren't cracked, and fasteners connecting the collector to the roof are tight. Whether for installation or maintenance, look for contractors certified by the North American Board of Certified Energy Practitioners(http://www.nabcep.org).

Solar water heaters not only save money-they save the environment. The DOE says a solar water heater can cut the electric load of your water heater by 2,500 kilowatt hours annually, which prevents 4,000 pounds of carbon dioxide from entering the atmosphere. That's equal to not driving your car for four months a year.

This article provides general information about tax laws and consequences, but is not intended to be relied upon by readers as tax or legal advice applicable to particular transactions or circumstances. Readers should consult a tax professional for such advice, and are reminded that tax laws may vary by jurisdiction.

Donna Rivera has written about alternative energy for Dow Jones, the Wall Street Journal, and Fox Business News for more than a decade. She's currently renovating her house with an eye toward energy efficiency and green technologies.

Reprinted from HouseLogic (houselogic.com) with permission of the NATIONAL ASSOCIATION OF REALTORS (R).
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