Green Home Financing

Greenhouse - Green Home - Green Home Financing

Green Home FinancingGreen Home Financing - If in the market for a home, one of the main qualifiers for one that meets your need is how green it is. A home that already has green features that make it energy-efficient and water conservation measures that has enlisted green building principles allows you to buy a more comfortable lifestyle.

Qualified energy efficient homes enable more financing options over a home that has a low home energy efficiency rating or none at all. This made possible because many lenders take into account the monthly savings provided by energy-efficient homes, and factors those savings into the buyer's debt-to-earning ratios. Lower utility bills allow a lender to stretch out the debt-to-earning ratio in order to justify mortgage amounts. Furthermore, lenders are able to extend additional financing options for green homes that are insured by the Federal Housing Administration (FHA).

Energy-Efficient Mortgages - EEM's are offered by most lenders and can be applied to almost all home mortgages, including home equity loans for green improvements. Loaning money via EEM's is safer to the lender because it is insured by the FHA. Also, additional financing can be obtained by the homeowner for home improvements without prequalification.

EEM for Home Improvement Provides:

  • Energy savings that can be financed as part of the mortgage.
  • Increase the value of older homes by making them more efficient and green.

Home Energy-efficiency audits - An official Home Energy Rating are determined by energy-efficiency raters who are certified under a national or state sponsored home rating system (HERS).

Home Energy Ratings - Buyers should always request a certified Home Efficiency Rating. Knowing the property's Home Energy Rating presents options to the buyer even if the home is not energy efficient.

A home energy rating should comprise of the following:

  • Inspection of energy-related features of a homes window efficiency, insulation levels, heating and cooling systems by a certified under a state or national home energy rating system.
  • Home energy rating and estimation of annual energy consumption and costs
  • Recommendation for energy improvements and their costs
  • Estimated returns on investments for improving a homes energy-efficiency

If the home does not earn a rating that qualifies it for an EEM you will be able to negotiate better with the seller knowing it will cost more to operate and qualify for additional home improvement loans from your creditor when securing a mortgage.