According to a survey performed in October 2009 by EnerQuality Green Building, 40% of home buyers in Ontario State had no problem paying an additional $10,000 to buy a “green home.” This was an 18% increase in the demand for green mortgages compared to 2008. This should tell you that the demand for efficient homes is on the rise, which definitely calls for improved construction practices of residential homes. That’s why you should be aware of the Energy Efficient Mortgage, commonly called the Green Mortgage.
What is a Green Mortgage?
With a Green Mortgage, you are given credit that qualifies your existing home or new home or helps you have a home that meets the set guidelines of energy efficiency. A Green Mortgage can save you money through tax incentives that you are given to enable your home to become energy efficient. The aim of this mortgage is to help conserve the environment.
Basic Energy Efficient Mortgage facts
Your lending institution should have plans concerning Green Mortgages, and it is good to consult them before thinking of taking such a mortgage. Since there is not much difference between a Green Mortgage and a traditional mortgage, you should not pay a higher interest rate or any additional costs.
Green Mortgage Process
However, it is good for you to be aware that you will be required to fill out Energy Addendum and Energy Audit forms for your Green Mortgage. These extra steps may lead to your Energy Efficient Mortgage taking longer to be processed. Nevertheless, an experienced and qualified Green Mortgage officer should give you the direction necessary to help speed up the process. The whole process should not take you more than two days, including the energy auditor’s report.
Who qualifies to take out an Energy Efficient Mortgage? A Green Mortgage can be taken by anyone who qualifies for other regular loans. However, your qualified loan officer will review your application so as to guide you regarding which mortgage program best suits you.
Kinds of Green Mortgage
· Veterans Administration EEM
This EEM version is only used when refinancing your home. You can borrow up to $6,000 to upgrade Energy Efficiency in your home only when your energy cost savings are up to $3,000.
· Federal Housing Administration EEM
According to the update on the HUD website, you qualify for an average of 33% of your debt to income ratio. You can borrow up to 5% of the appraised value of your home. It is not powerful like a conventional EEM; however, you enjoy FHA financing benefits.
· Conventional EEM
This is the most commonly used, and the most effective in the market. You can borrow an average of 15% of the appraised value of your home.
Importance of a Green Mortgage
According to an Appraisal Journal study performed in 1999, a $1 decrease in annual energy costs leads to a $20 increase in the value of your home. This should tell you that the more you decrease your energy costs by adopting a Green Mortgage, the more your home value appreciates.
Some of the benefits of an Energy Efficient Mortgage include:
· Reduces your bills, saving you money
· Enables you to qualify for a more expensive home
· Conserves your environment
· Gives you heat in the winter and cools in the summer, making it more comfortable
· Simple to maintain
· Helps you get money to upgrade your energy efficiency
In conclusion, adopting an Energy Efficient Mortgage should be your priority if you are living in areas where there is extreme weather. By having an EEM, you will enjoy having control over your environment and your bills, and will enjoy a secured future. While this article acts as your guide to understanding Green Mortgages, you can always do more research or visit your bank for more details and actualization of the Mortgage.