|Most everyone knows about the growing threat that vehicles pose to the environment, but did you know your house might be polluting the environment even more than your car?
According to information from the Environmental Protection Agency’s (EPA) ENERGY STAR program, the energy used in our homes accounts for 20 percent of all US greenhouse gas emissions. One of the best-kept secrets in home mortgages, however, might have us all breathing a bit easier.
It’s called the Energy Efficient Mortgage (EEM). This loan gives homeowners who select an energy-efficient home some notable financial benefits in recognition of their enlightened decision.
“Whenever you raise the standards on construction, Mother Nature benefits,” said Gloria Calderon, regional builder sales manager for Wells Fargo Home Mortgage in Las Vegas. “A home financed with an EEM means it meets some of the highest standards when it comes to energy efficient construction, and an energy efficient house will contribute to keeping the Earth’s climate protected for years to come.”
Calderon said an EEM rolls the cost of making energy improvements to new or existing property into the homeowner’s mortgage.
“The benefit to the buyer is that they can use their energy savings upfront to buy more home for the money,” she said. “Because homeowners will have more cash in their pockets at the end of the month they can buy a bigger house. In fact, most EEM borrowers qualify for up to 10 percent more mortgage than those with conventional loans.”
EEMs are available on properties where, during construction, the home has been upgraded to consume significantly less energy. Homes that are energy-efficient use cost-effective designs and energy-saving materials and equipment that conserve the use of non-renewable fuels.
There are two acceptable methods for qualifying a house as energy efficient:
1. The house has received a high rating on a Home Energy Rating System (HERS) report;
2. The house was built in compliance with energy conservation programs classified by the National Association of Home Builders (NAHB) as meeting the NAHB Thermal Performance Guidelines.
Las Vegas-based Wells Fargo Home Mortgage Consultant Jason Burrows said that most consumers mistakenly believe the break-even point on an energy mortgage won’t come until years down the road.
“People in Las Vegas are quickly realizing the benefits of buying an energy efficient home,” he said. “In some cases, the utility savings offsets any additional mortgage costs so it is often cheaper for the homebuyer to own an ENERGY STAR qualified new home.”
Energy-conscious construction that includes tighter installation of components as well as the use of upgraded insulation, high-performance windows and an energy efficient heating and cooling system also add value to a home when it comes time to sell because energy-efficient homes have higher resale value.
Mary Hobbs, vice president of sales and marketing for Distinctive Homes of Las Vegas, expects five to 10 years from now, all homebuyers will insist on “green homes” or houses that have been built to offer reduced energy costs.
She said one product that is causing people to take notice in green building techniques is Cocoon‰ insulation. Not only is it highly efficient thermal insulation, the recycled paper fiber has proven to be fire resistant, an added safety benefit for families.
“We’re putting it in the homes we build,” Hobbs added. The company also installs oversized energy efficient low “E” vinyl windows, energy efficient heating and cooling systems and quick recovery water heaters.
If the homeowner wants to go a step further and earn the EPA’s ENERGY STAR label, the house must be verified to be at least 30 percent more energy-efficient in its heating, cooling and water heating than a comparable home built to the 1993 Model Energy Code (MEC) and 15 percent more efficient than the state’s energy code. An ENERGY STAR label is earned only after the home’s energy efficiency is verified by an independent third-party such as an accredited home energy rater or Builder Option Package (BOP) verifier, or by adhering to the quality control procedures established from HUD-code manufactured homes, according to EPA information.
A Home Energy Rating System report must be completed on the house in order to qualify for an EEM. This report, conducted by an appraiser, measures the home’s energy-efficiency and the results are certified. This is a simple process and will not hold up the closing on your home loan. Your lender can arrange the home energy rating. In fact, the cost of this service can usually be financed into the mortgage, requiring no additional upfront payments from the borrower.
Fees for the certification will vary according to the size and complexity of the house. Typical costs range from $250 to $300.
For more information about qualifying for an Energy Efficient Mortgage, contact Wells Fargo Home Mortgage or one of our other partners; Republic Mortgage and Countryside Mortgage.