The energy mortgage is designed to finance new building projects that intend to have high energy-efficiency standards. It also includes energy rehabilitation projects for older buildings. The objective is to reward the improvement of energy efficiency in the building sector by offering favorable financing conditions. The energy mortgage is essential because financial institutions consider that energy efficiency has a risk-mitigating effect for banks and an increase in the value of the property.
Promoted by the Department of Housing and Urban Development, the energy efficiency mortgage is still in the pilot phase, and the participating financial entities will be encouraged to submit data ongoing. The aim is to evaluate how the incorporation of sustainability criteria in the financial market influences property values.
How to know your home’s energy efficiency
Before you try to opt-in for an energy efficient mortgage, you need to have your home energy audited by a certified rater. The audit identifies the areas that could benefit from energy efficiency and overall reduce the monthly bill for power.
Rating
There is an established guideline provided by the U.S. Department of Energy for several companies that offer Home Energy Ratings. Ratings are scored numerically ranging from 1 to 100. An additional rating ranging from one to five stars is also sometimes part of the process. Another thing to be added is an estimated energy cost. Generally, a high score means greater efficiency. The rater will also point out areas where upgrades are possible. These upgrades are typically cost-effective upgrades that will help you to save more money through future energy savings than they cost to install.
Cost
On average, a home energy rating conducted by a certified company will usually cost between $500 and $700. Note that prices vary depending on the area. The cost of the evaluation may be either carried as part of the mortgage or paid by the owner.
Eligibility
Any buyer who is qualified to obtain a home loan in the same vein also qualifies for energy-efficient mortgages. Most times, energy-efficient upgrades on virtually all homes, and the loans are available to anybody irrespective of location, home value, or current utility set up. Energy-efficiency mortgages can be part of government loans or other conventional loans.
Consider opting in for energy-efficiency mortgage today. Ask your housing lender if this option is available for you to take advantage of when buying a new home or applying for a second mortgage.