Energy-Efficient Mortgages
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 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. and internationally.
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.
For more information on energy efficient
mortgages, see the links below and the Web sites of our ECOBROKER Affiliates in
the lending industry.
Videos On This Topic:
From EcoBroker International:
Use the navigation arrows to the sides of the screen
to see more videos.
From Other Sources:
Energy-Efficient Mortgage -
The Best Kept Loan Secret (8:49) - HomeEnergy101 -
The
Energy-Efficient Mortgage (EEM) is a great tool available to home buyers, yet it
is often forgotten or disregarded. In this video, learn more about what an EEM
is, what retrofits it covers, how to go about obtaining one, and what the
benefits are.
Energy-Efficient Mortgages (4:16) - Fox 43 News -
Have you heard
the term "Energy Efficient Mortgage" kicked around and want to find out more?
Watch this short video from Fox 43 News about what an EEM is, who is involved in
the process, and why it is so good to look towards making your home green in
today's market.
Fix Up Your House
with Green Mortgages (4:38) - KOB News -
In this video,
listen as Bill Elliott of Rocky Mountain Mortgages explains what an EEM is,
where to find them, and the steps you need to get one including getting a HERS
inspection.
More Information
On This Topic:
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