How Green Are you??

By
Mortgage and Lending with GSW Consulting Group

Well Al Gore may have been green with envy when he lost the presidential race, but leave it to a politician to turn green into a good thing. When Al Gore came out with his documentary "An Inconvenient Truth" I wondered what his angle was. I knew about his previous book "Earth in Balance" but that was published a long time ago, and as we know most politicians turn their good intentions into political agendas, so I didn't pay Gore much attention when the documentary came out. Then he goes and wins an Oscar and the Nobel Peace Prize who can ignore him now and really if I am honest I do not want to ignore him. I appreciate the books, the documentary, and even his sense of humor which was far from evident as Vice President.

So Gore you started the train and now it is rumbling quite quickly and loudly down the track. I really can't give him credit for the whole kit and caboodle, one way to get people to listen is to hit their pocket book. Throw in high gas prices, a little recession, some inflation and you have the perfect ecological awareness cocktail. So where do we go from here? Well I for one am looking around to not only do my part by recycling and buying energy efficient appliances, but also at ways to stimulate green technology and industry diversification.

The lagging US economy needs a transfusion and what better way to get that fresh blood pumping then to go green. Green companies, cars, homes, technology, energy, and ultimately communities. This green movement is everywhere and I couldn't be happier, I happen to look pretty good in green.  In my search to be a Green Girl I have found quite a few ways to bring the green in, here are a few of the areas I have found to get a little green.

Green Real Estate: http://www.ecobroker.com/

The EcoBroker green real estate web site is a resource for real estate professionals and consumers looking to buy, sell, or educate themselves on green real estate. The web site has some good resources for converting a home into a green home, buying a green home, or even getting a green mortgage.  On the mortgage side the website gives a "snap shot" of the benefits of a green mortgage and then directs you to a few lenders that can help you. The mortgage they are highlighting is the Fannie Mae EEM (energy efficient mortgage) which they say can go up to 115% of the value of your home. What they do not say is that you still need to bring in the minimum down payment required by Fannie Mae and then you can include the cost to convert or upgrade your home into an energy efficient home into the mortgage.  FHA and VA also have EEM's, and FHA actually takes into account the monthly utility bill savings the home owner will have into the qualifying debt ratios.

Green Tax Deductions: http://www.energystar.gov/index.cfm?c=products.pr_tax_credits

The link above has a comprehensive list of what energy efficient tax credits can be claimed by home owners for 2006 & 2007. Though many of these credits expire in 2007 some have been extended to 2008, and if we are smart in this election year we will work to get these type of tax credits/deductions increased and extended further into the future. One important point to take into account is that even if there is no tax credit for energy efficient homes and appliances and initially these products may cost more to purchase than standard models, they will pay you back in lower energy bills within a reasonable amount of time.

Green Driving:  http://www.greencar.com/

Whether you are looking for a hybrid, an electric car, an alternate fuel vehicle, or just a smart car, greencar.com will keep in you in Know! This website highlights what is here, what's coming, and what's just hype. Qualifying alternative fuel vehicles (AFVs) purchased or placed into service between January 1, 2005 and December 31, 2010 may be eligible for a federal income tax credit of up to $4,000. Vehicles placed into service before January 1, 2005 may be eligible for a $2,000 clean-fuel vehicle tax deduction. Check with your CPA to see if there are additional tax advantages to owning green automobiles.  

Green Gadgets: http://www.greendaily.com/2007/12/19/best-of-2007-8-coolest-green-gadgets/

Now for the tech lover, her are the cool green-theme gadgets to keep your must-have tech toys working. Greendaily.com released their 8 favorite gadgets for 2007 that will lower your electric bill and save a tiny bit of planet earth. This is a great website to help you keep up on just about anything green.

I hope you look good in green as well, because it looks like green is taking over, it's about time!

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Rainer
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Alex Mordas
EarthSTEPS - Tallahassee, FL
Green Building Consultant
Nice post... Just wondering though, do you have any direct experience or knowledge of energy efficient financing ..? It is sooO hard to find any reliable information other than the "stories" about how it should work.
Apr 16, 2008 02:12 PM #1
Rainer
6,550
Bridget Ayers
GSW Consulting Group - Carlsbad, CA

Honestly Alex, I have a lot of experience with construction loans and construction to perm loans. Here in California we haven't needed or been able to utilize FHA loans. Now that loan limits have been increased and short sales and foreclosures have brought home prices down FHA, VA, FNMA, & Freddie Mac are the loans to know.

The construction to perm lending that used to be all the rage with lenders has quickly slipped away, because the construction loan must be kept until it can be modified into the permanent loan you have secondary market issues and only a few sources are doing it. The FHA 203K rehab loan however is now viable, and with the damage that some owners do before a home is taken over in the foreclosure, it is a great loan to use to pick up and quickly renovate a beat up property.

so long answer to your very short question is that I have researched the EEM loan because a client was looking to incorporate it, but in the end the client went to another property and we didn't need it. I would love to do one though. In Fannie and FHA guidelines it seems pretty cut and dry so I don't think it would be a problem incorporating it in a purchase. Construction to perm are two loans in one, with plans, line item budgets, multiple appraisals, contractor approval, loan to cost, loan to future value, contingency and interest reserve accounts, building time-frames, fund control, modification, etc. The EEM especially for FHA is a cake walk compared to that, FHA will actually allow the home owner to do some of the work so no contractors. There is an escrow hold back but that is easy to work through.

I think the real issue is that buyers don't think to work energy efficiency into a home purchase, I have never had a client ask me about an energy efficient mortgage. I have worked with builders and contractors for quite a while now and green has never been a topic of conversation. I posted this because I would like people to consider it as an option if they are going to be renovating any way.

These loans are by no means perfect I can already tell you the hiccups most people will face. First and foremost you still have to come in with money down, minimum 3% and up. FHA caps the dollar amount of the upgrades and as we know energy efficiency is more expensive upfront so the buyer will not be able to include that many items. FHA does take into account the monthly energy savings so there is an offset there. Fannie caps at a percentage not really dollar, but does not take into account the monthly savings so the borrower may have a DTI problem when they add in the extra expense to the mortgage. One last thing I see as being a problem is the future value of those items to a home, they wouldn't give enough value and Fannie has declining market hits in their loans.

No matter what loan you are doing in this market it is going to be a challenge, even the most straight forward looking loan seems to somehow throw curve balls at you. I think you have only heard "stories" because we haven't created a demand for this loan. In California I used to hear "stories" about the good old days of FHA and VA, I never thought I would be doing them. And yet here we are!!

Apr 16, 2008 03:13 PM #2
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Rainer
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Bridget Ayers

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