“Green” mortgages can help homeowners rein in energy costs and realize long-term savings. They are available for larger loan amounts that cover energy improvements such as geothermal heating and cooling, solar panels, and tankless water heaters, although recapturing the savings from the energy improvements may take several years. To apply for a green mortgage, homeowners need to have an energy rating report prepared by a trained examiner who will give the home a Home Energy Rating System (HERS) index score. The HERS report makes specific recommendations for energy improvements and projected monthly savings. Conventional loans cap energy improvements at 10 percent of the appraised valued of the completed property, and can boost buying power by counting energy savings as income. Federal Housing Administration loans cap improvements at 5 percent of the home’s value, or $4,000, whichever is greater. Because rolling energy improvements into the loan increases the loan amount, the monthly payments are higher. The goal is to have energy savings that are higher than the extra loan amount, and lenders will not approve mortgages that do not promise net cost savings. Several simple improvements can help save money, such as adding storm doors and programmable thermostats, replacing single-pane windows, adding solar water heaters, and upgrading to efficient HVAC systems. | Read More