Energy-Efficient Mortgages
The challenge:
For new homes, wrapping efficiency and renewable energy into a mortgage may be relatively easy. For existing homes, the most readily available option is to use a home equity loan or line of credit. Residential energy efficiency improvement loans are sometimes available through utility companies.
The solution:
Some of the least known and under-utilized programs in today's real estate market are Energy-efficient mortgages. They were created on the premise that energy efficient features or upgrades may cost a little more at the time of purchase, but pay for themselves over time because of lower utility bills. Energy efficiency upgrades can also add value to a home. Taking those two facts into account, an energy efficient mortgage can allow a buyer to have a monthly payment that is a few dollars more based on the forecast that energy efficiency improvements may save the same amount or more each month. The positive outcome of energy efficiency improvements is recognized in slightly more favorable loan-to-value and buyer debt ratios before the purchase.
While homeowners can sometimes achieve the same results with traditional mortgages, home equity loans, and home equity lines of credit, only green mortgage products are structured to help green buyers.
The process:
Most energy-efficient financing programs require that the borrower have an energy rating on their existing or new home. A rating typically involves an inspection by a professional energy rater who is certified under a nationally or state accredited home energy rating system (HERS). The Residential Energy Services Network (RESNET) provides a database of Certified Home Energy Raters by state.
The first easy step is to talk to a few lenders, such as the affiliates here on the site, and then prepare to have a certified energy rater come and conduct the analysis of your property. Your lender will also have suggestions as to energy raters who work with them on energy efficient mortgages, just as your lender has an appraiser with whom he/she works to conduct appraisals.
More Information
On This Topic:
Fannie Mae: Mortgage Products -
Energy-Efficient Mortgage
U.S.
Department of Energy's Energy Efficiency and Renewable Energy Clearinghouse:
Financing an Energy-Efficient Home
U.S. Department of Energy's Consumer Energy Information: Elements
of an Energy-Efficient House
U.S. Department of Energy's Consumer Energy Information:
Professional Home Energy Audits
RESNET'S
Home Energy Rating System Information
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