Green Financing

Here in the United States, there are a number of markets supporting environmentally friendly Real Estate. Energy Efficient Mortgages (EEMs) are specially designed to help homeowners afford efficiency upgrades such as smart thermostats, HVACs, water heaters, and more.

According to Climate Mundial “Green finance refers to any financial instrument or investment – including equity, debt, grant, purchase & sale or risk management tool (for example investment guarantee, insurance product or commodity, credit or interest rate derivative, etc.) – issued under contract to a firm, facility, person, project or agency, public or private, in exchange for the delivery of positive environmental externalities that are real, verified.” What a mouthful! So, what does all of that mean? Green financing options offer incentives by improving loan terms for the recipient for property owners who invest in energy efficiency. That translates to lower interest rates and lower monthly payments.

Energy Efficient Mortgages

Fannie Mae offers an Energy Efficient Mortgage program to help make green energy upgrades affordable. Energy Efficient Mortgages go hand in hand with the Home Energy Rating Services (HERS) rating that BarrierEnergy provides. To qualify, HERS Raters would conduct a Home Energy Assessment to help determine the cost-effectiveness of upgrades. The expected savings from installing efficiency upgrades will offset the cost of the improvements. Based on these findings, Fannie Mae approves an allocated amount towards energy-efficient upgrades. Therefore, they can guarantee an energy package loan to cover initial installation fees by lumping it in with the mortgage. This financing option is a cost-effective way to make upgrades to an existing or newly purchased home. Plus, it can greatly improve your purchasing power.

Federal Housing Administration (FHA) and Fannie Mae also provide programs to refinance your home. You can save half a percent on average on your mortgage with certain providers if you pass California State Energy Efficient Mortgage guidelines. An opportunity to save tens of thousands of dollars when refinancing a property is huge! In order to qualify, a HERS assessment will need to be performed in order to verify it passes mandatory efficiency standards. If you qualify, this will ensure you get the lowest interest rates available. 

Benefits

With an Energy Efficient Mortgage, you can access mortgage tax deductions and even qualify to cancel mortgage insurance once you reach 20% equity. At the same time, the value of your Real Estate can be improved, as energy-efficient buildings tend to be more resistant to deterioration. Given the measurable added value of energy-efficient upgrades to existing and newly constructed buildings, this one is a no-brainer.  While saving on energy costs in compliance with California state law, anyone can take advantage of these extra savings. Read more about the benefits of energy efficiency.

BarrierEnergy is a family-owned business, based out of Santa Barbara, California. We’ve been in the HERS Rating industry for over a decade! Reach out to our experts for more information about this service. Click here to book a free quote online!