Make
Your New Home a Green Home
 Many
homebuyers find their perfect home only to find that
it is anything but a model for energy efficiency. Not
to worry: a little-known home mortgage program can help
you save money and increase energy efficiency!
According to the National Association
of Home Builders, the number of homes built to “green,”
or environmentally friendly, building standards increased
from 2,500 in 2000 to 14,600 in 2004. If you are thinking
of buying a home, you may or may not be getting a green
home. National Wildlife magazine offers tips for homebuyers
who find a perfect home that leaves a bit to be desired
in energy efficiency.
Homebuyers looking to upgrade their
dream home into a green home can take advantage of a
lesser known financing option called the Energy Efficient
Mortgage (EEM). The EEM was created in 1979 by Fannie
Mae and backed by the U.S. Department of Housing and
Urban Development. An EEM allows homebuyers to add up
to 15 percent of the home’s value to their mortgage
and use that amount to improve their new home’s
energy efficiency. Homebuyers can choose from two types
of this mortgage: a renovation mortgage that funds improvements
to an exiting house and a new construction mortgage
that funds energy efficient upgrades to a house while
it is being built.
One couple who took advantage of the
renovation EEM in Lansing, Michigan, weatherproofed
their garage, added a programmable thermostat and replaced
an old furnace and found that they only once spent more
than $100 on heating their home once during the winter,
and that bill was $105. Their most expensive bills were
typically around $80, while the average heating bill
in the state was $169!
One stipulation to keep in mind is that
the EEM ensures that you don’t spend above your
means. Any energy efficiency improvements must “save
at least as much on the monthly energy bill as the buyer
spends on the additional mortgage.” For example,
if an EEM adds $40 to your monthly mortgage, your upgrades
must save you at least that much on energy bills. To
further guarantee your financial safety, the value of
the home improvements is added on to your home’s
appraised value, rather than subtracted from the equity.
Basically, you get a more efficient house for free!
With any sale involving an EEM, you
won’t move into the home until the energy efficient
repairs are completed. An energy inspector will first
inspect the home and determine its rating on the Home
Energy Ratings System (HERS), a system that rates the
energy efficiency of a home. Based on your inspection,
you can find out where most of your home’s energy
is being lost, whether it’s through an outdated
furnace, drafty windows or old appliances.
Many improvements will take hardly any
time and homebuyers get big benefits, yet the popularity
of the EEM remains low. Joel Wiese, a lender in Lansing,
Michigan, explains, “Most Americans are not taught
to think about what’s inside the walls of a house.”
In an effort to correct that, Wiese has become an advocate
for energy efficient buying. He and his partner now
only offer new home mortgages for houses that are built
to the Environmental Protection Agency’s (EPA)
Energy Star program. “We do every other kind of
mortgage, but we’re so passionate about Energy
Efficient Mortgages,” he says. “And there’s
no one who can’t afford them. If you qualify for
a conventional mortgage, you qualify for an EEM.”
Homebuyers are best advised to research
this type of mortgage before talking to a lender about
the program. Decide if it’s best for you, and
find a lender who will guide you through the process
or is willing to learn about the program. The national
director of the EPA’s Energy Star Homes program,
Sam Rashkin concurs, “We’ll see an increase
in the number of Energy Efficient Mortgages when lenders
see a benefit.” Rashkin advises homebuyers to
be resolute if they wish to finance their purchase through
an EEM, as many lenders are unfamiliar with the program
and may steer clients elsewhere.
Rashkin and other EEM advocates
are optimistic that the program will soon take off.
Rising energy prices and an increasing amount of concern
about environmental harm will encourage homebuyers and
homeowners to think about their own energy use and what
they can do to improve it. There is also the simple
matter of money. “If people knew that this would
add, let’s say, $10 to the mortgage each month
but would save them $40 to $45 a month on utilities,”
Rashkin says, “I think many more people would
take advantage of this.”
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