Five Ways To Green Your Mortgage
photo tifotter @ flickr
Amazingly, green mortgages go way back to the Carter Administration. But now that the bottom has fallen out of the subprime mortgage market, lenders are spooked. So finding a green lender is not exactly straightforward - you'll have to research and ask a lot of questions. Still, it seems like green mortgages - giving buyers a lower rate or a discount for efficiency measures - could also help cause that hoped-for trickle down of new green jobs and industry.
More green building, why not more green mortgages?
Even though there's a building slowdown, green building is continuing to grow - it's considered a competitive advantage in a slumping economy. Consumers should also get some advantage in their mortgage from buying or building greener abodes. Read on for five sources in the U.S. and abroad that are offering consumers some type of incentive in a green mortgage. And apart from the actual mortgage, if you think this is the time to take on efficiency, check this great state-by-state database of rebates and incentives for alternative energy and efficiency improvements.
photo woodleywonderworks @ flickr
1. Energy Efficiency Mortgage
The EEM is supposed to be widely available - if not very advertised - as part of a federal effort to help home buyers finance energy-efficient upgrades and buy energy-efficient homes. Basic info is at the Federal Citizen Information Center. Countrywide, one of the main U.S. domestic lenders doing EEMs, was bought by Bank of America, which has instead what it calls the "energy credit mortgage program" consisting of $1,000 off of closing costs. Critics charge EEMs are a hassle for consumers, and Fannie Mae calls them "unsupervised" loans. A home must be rated ($500-$700 certified rating) to get an EEM.
2. FHA Streamlined loan 203KAny Federal Housing Administration lender can finance an additional up to $35,000 worth of efficiency repairs or improvements before an owner moves in through the Streamlined 203K loan. Doris Ikle of CMC Energy services praises this loan, saying it is made for consumers and low on paperwork. "The Streamlined is simpler and less expensive than an EEM," Ikle said.
3. MortgagegreenMortgagegreen is a small U.S. company leading the charge for increased green mortgages. The company offers Greensave loans with 1/8% interest rate discounts or 1/4% cash rebate for green-rated homes. Mortgagegreen also buys 27,000 pounds of carbon offsets (about what the average U.S. home produces in a year) for each loan transaction completed.
4. Ecology Building Society's C-Change loanThe UK's Ecology Building Society is offering discounts on mortgages of between .5% and 1.25% - seemingly the best deal around - on the standard variable rate (SVR) of loan, to homeowners who can prove their new or existing homes meet a certain energy rating. (This will require a certified rating). Ecology's current SVR is around 6.45%, so a homeowner with the most efficient rating could expect to get a rate of approximately 5.20%. By next year all British homes are supposed to be energy rated. The C-Change Sustainable Homes discount (the C stands for Carbon) is available in the United Kingdom only. Four other mortgage lenders in Britain say they offer a version of a green mortgage. Also in the UK, the Green Building Council is encouraging the government to introduce a systematic green mortgage scheme in order to help homeowners make the kinds of changes that will reduce Britain's carbon emissions 80% by 2050 (it's estimated that about 27% of overall carbon emissions come from homes. All new homes are supposed to be "carbon zero" by 2016, but 25 million homes need retrofitting. In GBC's proposed "pay as you save" system, homeowners get a loan for improvements and pay it back based on monthly money saved in energy bills.
5. Canada's interest-free plansIn Canada, Liberal party is proposing that Canadians should be able to get interest-free mortgage loans of up to $10,000 for either building a greener home, buying one, or retrofitting their existing homes with efficiency features. Some Canadian banks already offer their version of the green mortgage - Citizens' Bank of Canada was one of the first - with flexible payment options and a $10,000 line of credit.Read more
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