erin, I think it's worth it. Your bills should go down otherwise considerably, with more efficient appliances and added insulation. And yes, beter to choose the time and manner of replacement than have them go out on the first day of a three day weekend.

erin, I'd seriously, seriously consider it. You need insulation (why not exterior walls?) and honestly it's a good deal and better for the world to replace with more energy efficiency. Also those are things you are going to need to replace. Probably sooner rather than later. Better to do it with a good deal and with a clear head as opposed to omg emergency because there is no hot water.

Oh, heh, what smonster said better than me and just before me.

I second those who are encouraging you, erin_o. Those appliances can and will go down at any moment. In the last 14 months, we've had to replace a furnace and water heater which were both significantly younger than yours. The new ones are more fuel efficient than the previous ones. I'd bet improvements in efficiency for you would be even more noticeable. Plus insulation? Definitely a good deal. I would also strongly encourage you to pay off such a loan at a faster rate than 20... also, what happens if you decide to move? Do you get to pass that loan onto whomever buys the house from you, or are you stuck paying for major appliances in someone else's home?

my Dad grumbles to not throw money at something that is working just fine.

Depending on how you define the terms - I'm fairly sure a 40 year old water heater is not, in fact, working just fine. Ditto the furnace. The energy usage for things like that are not even in the same universe anymore. And that's before you take into account the insulation.

You might look into whether you'd still be eligible for federal deductions for the new appliances too - might be even more benefit if you can deduct some or all from your income taxes.

my Dad grumbles to not throw money at something that is working just fine.

Depending on how you define the terms - I'm fairly sure a 40 year old water heater is not, in fact, working just fine. Ditto the furnace. The energy usage for things like that are not even in the same universe anymore. And that's before you take into account the insulation.

This. All of this. Given their age, they can and will die on you at any time, at the worst possible moment. And, again, given their age, they have got to be insanely inefficient, which means with new ones, you'll notice a difference (i.e., savings) in your utility bills.

You might look into whether you'd still be eligible for federal deductions for the new appliances too - might be even more benefit if you can deduct some or all from your income taxes.

IIRC, that tax benefit was extended into 2011, but you might want to double-check it. Also see if your local utility company offers any incentives/rebates for buying energy-efficient appliances/whatnot.

Also, $7k is a REALLY good price for HVAC, water heater, AND insulation. I mean REALLY REALLY. If we could have done that for just an extra $1k on top of the HVAC we just had installed, I would have been all over that in a hot minute. And 5.9% is a very good interest rate.

t edit Also, I have to echo Cass and ask -- why not insulate the exterior walls? Because if you do that, it'll just decrease the need for the furnace to kick on, and lower your utility bill even further.

Also also, all of those improvements are going to add to the value of your home, which you might not care about if you're not planning on moving any time soon, but then again, you never know.

Do it, erin. The new furnace and water heater will be at least 30% more efficient by themselves and with the insulation, you'll see a really significant drop in energy costs.

Also, when water heaters go, it's ugly, since one that age is working on rusting through.

If you're going to not insulate something, the basement is usually the last priority, not the walls, although I know the walls are more expensive. Get the HVAC guys to seal and caulk everything while they're there.

Also, if the hot water heater goes, it may take other things with it, depending on where it's located. I still have stains on my ceiling from where an upstairs hot water heater broke and rained into my bedroom, as well as flooding my upstairs neighbor's back room. I think the landlord had to buy new carpet and padding and redo a fair bit of other stuff in my upstairs neighbor's place.

About the 10th person to chime in with an endorsement of the new equipment and insulation plan. Sounds like a good deal at the right time.

The last vacation day has been delightful. I swam for about an hour. Got a bit of a sunburn! Ooops. Cooked a bunch of stuff to eat all week including my best chili ever according to DH. Which is cool since it was veggie and neither he nor Bobby realized the meaty stuff was soy. Then we went for a nice boat ride and saw a bunch of manatees. Brandy went along and was a very happy doggie.

Do it

but I will tell you not to insulate the exterior walls -- Older houses are hard to do properly and if there isn't enough air circulation it can lead to the evil sick making black mold.