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"A society built on green design, sustainable energy and closed loop systems, a civilization afloat on a cloud of efficient, non-toxic, recyclable technology." ~~Alex Nikolai Steffan

11.11.2007

Energy Efficient Mortgages

My friend, Marta, and her husband want to buy a home in Tallahassee. They've been renting since they got married and recently moved from an apartment to a single family home. "We're waiting until the housing market bottoms out, then we're buying," she told me. How will you know when that is?

"When the prices start going back up, that's the time to buy. We're going to get a EEM, too, then install some solar."

Energy Efficient Mortgages (EEM) are loan programs that allow homeowners to make energy efficient modifications and add their cost to the mortgage at the time of purchase or refinancing. Basically any energy efficient upgrade, heating and cooling systems, duct sealing and repair, insulation, energy efficient windows, increased insulation, Energy Star appliances, would qualify.

Not so long ago, these energy efficient mortgages were marketed, not for their benefit to the environment while lowering utility costs, but so that the homebuyer could qualify for a larger loan, by calculating a lower housing cost through reduced utility bills. Now, with all the sub-prime mortgages crashing, buying more house than one needs has proven to be a risky strategy for some.

Homes must be rated for energy efficiency with a certified Home Energy Rating System (HERS). Prepared by a trained Energy Rater, the reports rate a number of factors on a scale of 1 to 100. In addition to the energy improvements, the local climate and utility rates are calculated. The score is calculated as the house is originally, then recommends cost-effective energy upgrades, estimates their cost, their annual savings and the life of the upgrades. After the upgrades are installed, a new Rating Score is calculated, along with the estimated annual total energy costs for the exisiting home before and after upgrades.

The higher the score, the greater efficiency. Cost-effective upgrades are those that will save more money through energy savings than they cost to install. Older homes can qualify for upgrades, as well as newer homes and new construction.

Loans are available through the Federal Housing Administration (FHA), up to 5% of the property value (up to $8,000), with 203k loans through FHA for rehab loans up to $5,000. The Veterans Affairs Energy Efficient Mortgage is available to qualified military personnel with a little different amounts of financial incentives.

More information is available at the US Department of Energy,the Alliance to Save Energy, US Department of Housing and Urban Development,
and the US Department of Veteran's Affairs.
See also My Energy Loan.

1 comments:

Nice post! I like the suggestions.

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