Should You Get an Energy-Efficient Mortgage?

Homeowners who lack the funds to make their homes more energy efficient may find that a “green” mortgage is their best option. Energy-efficient mortgages (EEMs) let borrowers add extra money to the balance of a mortgage loan or refinance for making energy-saving improvements, and are sponsored or backed by the federal government. There are two types: EEMs, which are used to buy new homes that meet energy-efficiency standards, and energy-improvement mortgages, which are used to give energy-efficiency upgrades to existing homes. Both types tend to be referred to as EEMs. Homeowners can finance solar panels, geothermal heating, tankless water heaters, newer heating and air-conditioning systems, weatherization, and energy-efficient windows or appliances. Funding for energy improvements is usually no more than 10 percent of the appraised value of the completed property. Conventional lenders also may count energy savings as income. Energy-efficient homes can sell for a higher price, depending on the home, the types of improvements, and the demand in the local market. Homeowners interested in an EEM should find out if they qualify, hire a rater to evaluate the home’s efficiency, and shop for a lender willing to help them obtain a green mortgage. | Read More