This is something I had been looking into for a few weeks, but have been unable to find anything on the subject. The idea is that by doing home renovations (such as EIFS) which make your home more energy efficient, you should be able to get more financing for your home. After all, if you cut your energy bills from $2,000/year to $1,000/year, and you redirect that income towards the principle on your home – you would be able to afford a larger home, or one in a nicer neighbourhood.
On top of that, EIFS would increase the resale value of your home beyond the money you spent on the actual renovation.
Article found at: http://www.mainstreetrealestatefacts.com/
One aspect of green real estate isn’t quite keeping up – the financing end. Energy Efficient Mortgages known as EEM’s have actually been around since after Jimmy Carter and the oil crisis! But it is still pretty rare to find one that has closed in the Chicago area. Part 1 of this post will explain what a green mortgage is and the steps required. Part 2 will outline the different green loan options available. This topic has the potential to change a lot so be sure to contact a trusted lender for more information.
Green financing is available for the purchase of a new green home, or to make improvements to what I call a not-yet-green home. A green improvement loan could apply either for your existing home or to purchase a new home you plan to fix up.
Steps Required
The thing that makes green loans different is that an extra step is typically required – an Energy Audit or a HERS Rating. An appraisal assesses the value of the home. An energy audit assesses the energy efficiency of the home. (HERS stands for Home Energy Rating System.) In Chicago these tests usually cost at least $400-600 with the HERS Rating being both more thorough and more expensive. Results help the lender determine how much you can expect to save on your utility bills. In most cases, the cost of the additional inspection can be rolled into the amount of your loan.
The process typically follows these steps:
Step 1 – Buyer/home owner completes the Energy Audit or a HERS Rating.
Step 2 – Lender increases your approved mortgage amount based on projected monthly utility savings.
Step 3 – The rest of the closing process is similar to a traditional loan.
Tips:
- Plan ahead so you can complete the extra steps in time.
- To get the best results, don’t ask a lender if they offer an EEM. Ask the lender if their local office has closed an EEM loan.
To learn more about Energy Efficiency Mortgages check out these recommended links:
- EcoBroker International - http://www.ecobroker.com/misc/lenders.aspx
- HUD – http://www.hud.gov/offices/hsg/sfh/eem/eemhog96.cfm
- RESNET (professional association for energy auditors) – http://www.natresnet.org/ratings/overview/faq_mortgage.htm
This site in particular explains it well: http://www.hud.gov/offices/hsg/sfh/eem/eemhog96.cfm
If anybody is aware of any companies working with home owners on Energy Efficient Mortgages, leave a comment.
