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Going GREEN in the Pacific NW

By Susan Templeton

Mortgage and Lending

January 31, 2009 02:50 PM

Loannetter

We have quite a lot of green action up here the the 4th corner. Something about all this clean air and rain maybe. I meet people who lived polluted urban lives who have come here in search of something you can feel when you look at Mount Baker's snow covered peak on a sunny day. It's fresh and spacious and a little heady. People associate what they hear from local non profit groups about sustainability and living more in balance with building or renovating green. They've heard all about Green Mortgages, Green Building and various green products....everything from green heat to green energy to green flooring, and even green cars! We are very fortunate in that our area many bright people working are on these technologies and putting them into practice in all kinds of ways. I am here to tell you there is more than just a bit of puffery going on in my world abouts so called Green Loans.

FACT: The Energy Efficient Mortgage(EEM of 1979) has been dusted off and represented in a nice green ribbon to capitalize on the sustainability trend. Unfortunately for many banks, the process of vetting a project for energy efficiency is just not something they know how to do.

For renovation projects featuring energy efficiency upgrades the EEM has its limits. Firstly, not everyone will qualify for a Government (FHA, VA or Home-Style) loan. Expect the usual hoops and then some. EEM's require good credit, full documentation of income and more strict debt to income ratios. There are also EEM funding limits: topping out between $5 -$8,000 above your mortgage limit. Besides which the FHA limit in our tri county area is well below the conventional limit. $(304,750 for Whatcom County.) so if you need more you will definitely need to find a construction lender who is a specialist in renovation or custom building loans.

When Is More Better? If you are just making energy improvements, some of themost effective changes you can make are weather proofing. I mean sealing gaps and insulating and fortunately thos are not the most expensive things you can do for quite a big return. It's not surprising for a new furnace to cost $5 -8,000 -so if you happen to need more green you may need a Renovation Loan. Any Renovation Loan works for smaller projects you can accomplish in 6 months or more. It factors how your improvements will enhance the value of your home. Most renovation loans don't take energy improvements into the equation...so we build the financial case to prove their worth over time. For any construction project, the ‘as built value' must equal or exceed the costs you incur to make the improvements pencil out to a lender.

Get the Real Deal! Your green project needs to realize more than good intentions. Invest in a designer or architect and builder who are certified under a green program. The two most recognized programs are: Built Green, rated by stars and LEED rated as silver, gold or platinum.

Built Green is run by our local BIA chapter: www.biawc.com There are other programs in other regions.

LEED for Homes is managed by the US Green Building Council. www.usgbc.org this program was originally developed by commercial architects and has the most rigorous testing

Get a leg up on the spring building boom! www.buildnet.blogspot.com Factoid: Most so called 'green loans' are a public relations ploy to get you in the door and the lender doesn't even know about EEM's and may not have a specialist constrcution department--borrower beware!

So remember the new mantra of our times: Green is Good!

Click this Credit Link to order your tri-merge lender report on our secure site. Credit really matters a great deal to construction lenders. You need to have at least 20% in the project and money in the bank to carry you during the project to get a construction loan.