Green Living Tip:
Technology Snapshot &
Benefits:
Energy-efficient mortgages are
one of the most beneficial and under-utilized programs the consumer can find
and capitalize upon in today's real estate market. An energy-efficient mortgage
can add an additional 15% of a home's appraised value to the principal of a new
loan or a refinance, often at no additional cost, no compromise in the
loan-to-value ratio for the borrower, and sometimes at a better rate. Yes, one
pays a bit more in principal and interest, at today's rates, roughly $30-50
dollars per month, over the course of the loan. However, when this extra
principal is used to install energy efficiency measures, it is not uncommon for
the property owner to realize $75-100 per month in energy and cost savings.
When working with a lender who offers and understands the energy efficient
mortgage programs available, the steps for the borrower are very
straightforward.
Estimated Cost Savings:
There are no additional costs
associated with many energy efficient mortgage options, other than the cost of
the additional $15,000 in amortized principal and interest (PI). By definition,
the savings created by the energy efficiency measures are greater than the
additional PI. This provides the assurance lenders need to conclude loans of
this nature are good business.
In fact, the attractiveness of
the energy efficient mortgage options also extends to lenders. What happens is
that as the borrowers make the stated energy efficiency improvements and create
monthly utility bill and other savings, their monthly cash-flow improves. This
improvement in monthly cash-flow makes the borrower an even more stable and
reliable customer, less likely to present the prospect of default.
Issues:
Most energy-efficient
financing programs require that the borrower has 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.
Regional Issues:
Energy-efficient mortgages and
other financing options for energy efficiency improvements are available
throughout the U.S.
Installation (Getting it
Done):
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:
RESNET'S Home Energy Rating
System and Energy-Efficient Mortgage Information
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