Energy Efficient Mortgage
An Energy Efficient Mortgage allows home buyers to borrow more than they traditionally can qualify for, if they buy a home that has been rated Energy Efficient.
How is this possible?
- Energy savings is regarded as additional net income to a buyer/homeowner.
- An energy efficient home will appreciate by $10 – $25 for every $1 reduction in annual fuel bills” saved. *
* Appraisal Journal of the Chicago Appraisal Institute
The United States Government encourages homebuyers to make their homes more energy efficient. They do this by offering them the opportunity to borrow an additional amount, over and above their purchase loan, to make energy improvements to the home. The borrower does not have to qualify for this extra financing. Instead, the house qualifies for it because the cost of owning it is reduced.
What this means is that the government recognises that energy efficiency improvements will actually allow a homeowner to save on energy costs and use the additional funds to afford the energy upgrades.
However, this opportunity is only available if the borrower can show that the finance payments for the energy improvements are less than the savings. This is achieved by having a Home Energy Rater inspect the home and produce a HERS (Home Energy Rating Service) Report to support the above.
Energy improvements can include any of the following:
- Added insulation in the attic, floor or walls.
- Energy efficient appliances.
- High performance windows.
- Spray Foam Insulation.
- Air duct leakage sealing.
- Heat pump water heaters.
- Home Air Sealing and Weatherization.
- Reflective roofing.
- High performance air conditioning.
- Variable speed pool pump
- Solar hot water heaters
In summary, the main features of the Energy Efficient Mortgage are:
- No extra down payment
- Automatic qualification
- 5% of home value
- Appraisal automatically increases
- Additional allowance for solar
- Always a positive cash flow for buyer
Hopefully, the above information has been helpful to you. If you have not already done so, please visit my “can you afford mortgage financing” page to get you going. You will then have an idea of whether you can afford mortgage financing, and if so, take the next step, which will be to start talking to a mortgage loan officer.
Other posts about financing that will also be useful to you are:
Our services are always FREE to Buyers, and we contribute $500 towards closing costs if you buy through us, as well as $250 toward our Switch to Green, Switch it Forward Fund, to help fight poverty and climate change.
Let us show you how we can be Your Green Dream Team to help you to Live in a High Performance Green Home, that will Save You Money and help you to Pay Your Mortgage Off Years Earlier, while at the same time, live in a home that is Healthier, More Comfortable, Safer and Kinder To The Earth.
Thank you for visiting. Please leave a comment below and then check out the rest of our BLOG. We look forward to making Green Home living your reality.
Marius J Smook – Licensed Real Estate Eco-Broker, LEED AP for HOMES, Home Energy Rater.