Friday, October 5, 2012

Energy Efficiency Mortgages

Energy-efficiency mortgage products are relatively in the financing and conservation world. It is not easy to develop new mortgage products, since they generally have to conform to new FannieMae or FreddieMac underwriting guidelines to be eligible for sale on the secondary mortgage market. Without having special programs like these approved for Fannie/Freddie underwriting, the number of lenders willing to create such loans would be ridiculously small.

These loans have been available for a few years, but are becoming more common. For a property that has energy savings built-in (replacement windows, extra insulation, solar or geothermal systems, etc.), an energy assessor will determine the amount of savings created by the improvements, which allows the borrower to take a larger loan (since the extra money isn't needed for utility bills). It may also be possible to take a larger loan for a property that needs the improvements, giving the borrower extra funds to improve the property.

A better description of this type of loan can be found on the blog of an Envoy Mortgage loan officer, who is specializing in loans tailored for energy efficient properties.

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