Energy Efficient Mortgages

Mortgage and Lending with Citizens First Financial

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 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

Renee Kokoszka, Loan Consultant for Suburban Mortgage, Park City, Utah


Comments (4)

Mark Flanders
Consulting - Silverdale, WA
Renee, this is a good post. Sorry I didn't find it sooner. I have been doing mortgages for a while now and just found out about these in the last 3 months. They are very under-utilized. Nice job and keep the good aricles coming!
Dec 29, 2006 11:09 AM
Steve Dalton
219-465-8352 - Valparaiso, IN
Northwest Indiana Home Builder

I am very curious about these for use with new construction

We ran some numbers and found that it would increase the cost of a home quite a bit, perhaps not enough to make any financing or tax benefit worthwhile.  Any experience with new construction?

Dec 29, 2006 12:59 PM
Renee Kokoszka
Citizens First Financial - Park City, UT
Thanks for your response!! We do have some builders in Park City who do "green" construction and they have voiced the same opinion that it is much more expensive.  The same comment comes from home decoraters, you can take this all the way from choice of light bulbs, and non-toxic paint, to green flooring, etc.  And the one thing they all agree upon, is this course is worth staying on and finding the balance between cost and effectiveness.  The choices, in terms of cost, have to be where is the biggest bang for the buck, not necessarily doing everything, because there is so much out there, but developing a strategy that moves us in the right direction.  The best information that I found regarding new homes is with Energy Star.  They have solid information and a builder can partner with them, and take advantage of th eir expertise, and their marketing strategies.  You can check them out at http: //
Dec 30, 2006 04:30 AM
Eleanor Thorne
Equity Resources - Cary, NC
Equity Resources 919-649-5058
Are you offering this loans?  If so - who are you doing them with - Countrywide??
Feb 25, 2008 09:21 AM