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Cost of a New HVAC System

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It’s a summer heat wave, and your air-conditioning system is chugging away in active distress. Or maybe it’s winter, and your new heating bill is twice as high as your neighbor’s even though your thermostat is always set five degrees lower.

It may be time to replace all or part of your HVAC system, which typically controls your home’s heating, ventilation and air-conditioning needs. Perhaps your current system is a few decades old and you’d like replace it with something more energy-efficient.

Whatever the reason, paying for a new HVAC system can get expensive. Here is what you need to know to make your replacement as affordable and efficient as possible:

What is an HVAC system?

HVAC is an acronym that refers to any system that handles a home’s heating, ventilation and air-conditioning needs. HVACs comes in all sorts of sizes and configurations. For example, your home may have an all-in-one, single unit that sits directly outside and handles both your heating and cooling needs. More common, however, is an HVAC that has two parts: an inside-the-home component for heating and an outdoor component for air conditioning.

The heating component inside your home typically has four main parts:

  • Burners
  • Heat exchanger
  • Blower
  • Flue

Meanwhile, the cooling part of your HVAC has three main parts:

  • Condenser coil
  • Compressor
  • Indoor evaporator coil (often mounted inside your furnace)

Here is how the heating and cooling parts of your HVAC work together:

Burners inside your furnace generate combustion gases, which then pass through a heat exchanger that warms air blown into it. The blower in your system sends the warmed air through a series of ducts that serve different rooms in your home. Meanwhile, the flue acts an exhaust for gaseous byproducts. During the summer, your air conditioner’s compressor, condenser and indoor evaporator coil work together to cool the air and remove both warm air and moisture. In the summer, your blower also helps distribute cooled air throughout your home.

How to know if an HVAC system needs to be replaced

Many heating and cooling problems can be fixed. For example, if you see water in and around you unit, or in the drip pan, your AC condensation line may be clogged, something you or a professional might be able to fix. On the other hand, if you see signs of freezing around the exterior, it could be a sign of a broken blower fan, a bent refrigerant line or just a case of dirty air filters that need cleaning.

Even with careful maintenance, a time will come when your unit simply stops running, runs constantly or turns itself on and off. When that time arrives, your unit may simply be too old.

“Typically, HVAC systems in consumers’ homes last 12 to 15 years,” said Michael Lukes, the president and chief executive of Total System Services in Boise, Idaho. “That’s why we always look at the age of the system first, to give the homeowner a sense of whether or not it’s worth the repair or if replacement might be a better option.”

If a replacement is the right answer, you should think about replacing both the inside and the outside unit at the same time and with matched units, which typically provide the best energy efficiency.

What’s the average cost of an HVAC replacement?

According to Trane, an HVAC manufacturer with North American headquarters in Davidson, N.C., the cost of buying and installing a new HVAC system will depend on a host of factors, such as the required size of your unit, the age and setup of your home (older homes may need retrofitting), the climate where you live and your system’s SEER rating, a measure of energy efficiency.

Costs will also vary depending on whether you include special features, such as air cleaners or the ability to electronically adjust how much heating or cooling goes into individual rooms. Still, “for the average home, one that’s around 2,200 square feet, I would plan on a cost of about $6,500-$9,000,” said Lukes, the president of Total System Services.

Before installing a new HVAC system, check to see that its SEER rating is appropriate for the needs of your home and where you live. SEER stands for Seasonal Energy Efficiency Ratio; the higher the SEER rating, the more energy-efficient the unit. In 2015, new federal guidelines set minimum SEER requirements across the U.S. for both air-conditioning equipment and heat pumps; for example, the SEER minimum for two-part, air-conditioning systems is now 14 in southeastern and southwestern states and 13 in northern states. Newer HVAC units typically have a SEER rating between 13 and 21.

What’s involved in replacing an HVAC system?

Replacing an HVAC system usually takes many steps. Here’s an overview of what to expect:

Pre-installation evaluation

“The first step in replacing a consumer’s HVAC system is doing a home analysis,“ said Philip Klapper, the residential operations manager at Total System Services. “That’s where we measure the things that keep the heat in or take heat out on your home.”

According to Klapper, a home analysis will look at details such as the size and location of your windows and the overall square footage of your home. An HVAC company will then use that information to do a load analysis to determine the size of the system that best fits a customer’s needs.

A home analysis is standard in the HVAC business. For homeowners, it offers an important chance to compare contractors, to see how they might work in your home and what they feel your home’s needs might be. Before buying a new HVAC system, consider getting home analyses from a few different contractors. A good contractor will also consider your budget needs.

Installing a new HVAC

The process for replacing the heating part of your old HVAC system generally takes fewer steps; according to Klapper, it’s usually a matter of disconnecting the affected part — such as the heat exchanger or blower — and installing a new one. Replacing the air-conditioning component of your system is more complicated. Here’s what to expect:

  • Pump down: After your current HVAC system has been turned off, any remaining refrigerant will need to be removed and secured. Current environmental regulations set strict standards for how refrigerant needs to be stored so it doesn’t contaminate water or soil.
  • Remove the old system: Once refrigerant has been removed, your HVAC contractor will remove your old compressor and check to ensure the area where the new compressor will sit is level. If necessary, a new concrete AC pad will be put down to ensure the system has a sturdy foundation.
  • Hook up the new system: Installing a new compressor is the next step. You’ll also get a new evaporator coil, which delivers refrigerant from your outside AC unit to the indoor portion of your unit.
  • Vacuum pump: Before new refrigerant can be introduced into your new system, your contractor will use a vacuum pump to pull air and contaminants out of your system’s refrigerant lines. Any leaks in your new system will become apparent at this point.
  • Introduce new refrigerant into the system: The last step in installing a new HVAC system is to carefully introduce new refrigerant. After that’s done, the system can be turned on and tested.

How to finance an HVAC replacement

Replacing an HVAC system is expensive, so it’s worth considering ways to finance a new system to spread the costs out over time. Here are some options:

0% APR credit card

A no-interest credit card might be a reasonable choice if you have excellent credit (usually a score of 700 or more) and you’re able to pay off the cost of your new system before the promotional period on your card expires, usually 12 to 21 months.

Unlike a loan, taking on a new credit card doesn’t come with closing costs. The catch: An expensive new HVAC system might push you beyond the credit limit on your card, which means you would have to pay for some of it on your own. Also, after the promotional period on your card is over, your interest rate will revert back to the standard APR.

Home equity loan or HELOC

Tapping into the equity in your home — the percentage you owe after you take away your mortgage — is a popular way to help pay for big-ticket purchases. Here are two ways to do it:

A home equity loan works like a second mortgage. The money for the loan is disbursed in one lump sum and you make regular payments on it until the balance is paid off. A home equity line of credit, or HELOC, works more like a credit card. During a draw period that can last up to 10 years, you make monthly interest payments on any cash you take out. After the draw period is over, you repay the principal you owe, with interest.

The biggest downside to both home equity loans and HELOCs is these loans are secured by your home. If you don’t keep up with payments, the lender has the right to foreclose on your home.

Personal Loan

Unlike home equity loans and HELOCs, personal loans are unsecured, which means you don’t have to put up anything as collateral. Also, you can usually get the money quickly, which could be a good thing if you need to fix your HVAC unit in a hurry. Still, this type of loan often comes with high interest rates, so check the terms carefully before signing on.

Contractor Financing

If a contractor offers to help arrange financing through a lender they work with, proceed with caution, even if it seems like the fastest and most convenient option. Before you agree to any sort of financing, make sure to shop around with different lenders and read the fine print before you sign. The Federal Trade Commission warns consumers this type of arrangement might be a scam, and that by signing up, you may be exposing yourself to a loan that comes with a high interest rate, points and fees.

How to save on energy costs

Once you’ve updated your HVAC unit, consider looking for other ways to save on energy costs. Often, just a few simple steps will pay off nicely.

“I cannot tell you how important changing filters is for an HVAC system,” said Lukes. “Leaving filters in past their prime makes your system work so much harder, and it’s actually the No. 1 cause of breakdown.”

He recommends setting up an annual maintenance program with your HVAC contractor to both replace filters and spot-check your system.

The bottom line

Whether you’re replacing an old system or investing in one that’s more energy-efficient, replacing an HVAC system can get costly. Fortunately, there are ways to make it work, but first research different systems, potential contractors and financing options to find what’s right for your needs and your wallet. For more on financing the purchase of a new AC system, read this guide from LendingTree.


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