What are Energy Efficient Mortgages?

We all want to be a little greener these days, whether it’ s being a bit more conscious of the Earth or having more green in our pockets. So did you know there’s a type of mortgage loan that can help you do both? An energy efficient mortgage provides financial incentives to those who are in the process of buying, selling, refinancing or remodeling a home and can help an individual increase not only their contribution to the environment, but their own financial well-being, too.

How Energy Efficient Mortgages Work

An energy efficient mortgage provides the borrower with special incentives when purchasing a home that is energy efficient, or is remodeling with energy-saving improvements. These renovations to update an older or less efficient home may be financed as part of the mortgage.

Advantages of Energy Efficient Mortgages

  • Save on Energy: Although your monthly energy efficient mortgage payments may increase to cover the expense of the renovations and new technology, the decrease in energy costs should eventually balance out or even increase the amount of money you save versus spend.
  • Home Value: If the home is ever put the market, greener technologies can add to the resale value of the property–providing more green!
  • Ability to Sell: A green home can attract more attention in a competitive real estate market, thus allowing your home to move and sell quicker.
  • Taxes: An energy efficient mortgage ultimately credits a home’s energy efficiency in the mortgage itself, becoming tax deductible in some cases.
  • Better Loans: Borrowers are provided the financial means to pay for long term energy saving strategies and stretch debt-to-income qualifying ratios on loans. Consumers with an energy efficient mortgage qualify for larger valued loan amounts and can purchase a better and more energy-efficient home.

Keep in mind that borrowers seeking an energy efficient mortgage have to get their home inspected by professional home energy raters. This must be concluded before financing is approved and ultimately verifies the home as energy-efficient for the lender.
Be sure to compare this type of mortgage against other options available to you before committing to a loan.