The Jones's are purchasing a new home. Like all new houses, it comes with insulation, and if they don't specify what they want, they'll usually get a lower performance insulation. An estimate for the default insulation option in the Jone's new home is $4,000, bringing the total home price to $250,000. With this insulation installed, local energy cost average $300 per month.

Monthly morgage payment

(@30-year 6.0% fixed interest rate):     $1,498.88

Monthly energy bill:                             $  300.00

Total monthly cost                               $1,798.88

The Parkers asked thier builder to install SPF in thier new home at an initial cost of $12,000, which nudges the home's total cost to $258,000. But with SPF, they know thier energy bills are going to be at least 40% lower.

Monthly mortgage payment

(@30-year 6.0% fixed interest rate):     $1,546.84

Monthly energy bill

($300 minus 40% min.  savings             $  180.00

Total monthly cost                                $1,726.84

By investing in the "more expensive" SPF, the Parker's will actually pay less each month -$72.04 less. That's $864.48 per year and $25,934.40 over the term of the loan!