I have recently become involved in an environmental improvement committee. My area of focus within this community is knowledge, understanding and promotion of energy efficient mortgages. I'd love to hear if any other lenders have energy efficient mortgage programs or experiences. Meanwhile, I thought surely everyone would appreciate this information on the subject.
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.
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. For the real estate agent, the energy efficiency of a home becomes an attractive selling point.
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. To help qualify for most energy-efficient financing, the report usually must show that the home is energy-efficient or that recommented improvements are cost-effective and will save your more money than you'd be borrowing to install them.
For more information on energy efficient mortgages, see the links below More Information On This Topic:
Fannie Mae: Mortgage Products - Energy-Efficient Mortgage
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
Renee Kokoszka, Loan Consultant for Suburban Mortgage, Park City, Utah
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