| WASHINGTON WATCH: NEW BILL ADDS ENERGY TO AFFORDABILITY. |
 Topic Summary: When you apply for mortgage financing either on a new loan or a refinance, the decision makers look at several numbers when deciding if the amount you are asking for is justified by your income and expenses such as taxes and insurance. A bill introduced by Democratic Sen. Michael Bennet and Republican colleague Johnny Isakson aims to include a homes' energy cost as another component of affordability.The New Mortgage Math! Principal + Interest + Taxes + Energy Use When you realize that most households spend more on heating, and cooling their homes than they do on real estate taxes and insurance, you can see how energy costs impact affordability. On average, homeowners pay over $2200 per year to heat, power and cool their home. See this chart on where your energy dollar goes. The just introduced SAVE Act, would require decision makers ( through changed regulations) to take into account the relative energy efficiency in a home and its impact on the bottom line for the prospective buyer. In short, if a home is "Very Green" and has low energy costs, the affordability basis is better for the homeowner. A high cost, energy-sucking home would have higher than normal energy costs and would be a negative for homeowners who are on the border line for approval. There are several government soon-to-expire grant programs and tax rebates aimed at homeowners to improve efficiency but they are all post- purchase. The aim of this bill is to provide incentives at mortgage time, either with more flexible financing terms or relaxed lending criteria for homeowners who buy an energy efficient home. There has been talk in the past of giving homes a rating on energy consumption, similar to the yellow stickers on new appliances. The legislation also aims to make current homeowners, who undertake energy improvements, aware that there will be better payback at sale time. This is because energy efficient homes will be more marketable and may command a higher price. We will keep you up to date in the next edition on the movement of this important legislation. Who Is Also Supporting The Proposed Legislation? The proposal is supported by many organizations, including the U.S. Chamber of Commerce, the Appraisal Institute, the U.S. Green Building Council, the Natural Resources Defense Council. Also many large Home Builders are on the supporters list as there is a positive jobs impact and other economic stimulus benefits. |
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