Energy Upgrades Can Pay Off For Homeowners
By Kevin McCallum
THE PRESS DEMOCRAT
Published: Wednesday, December 23, 2009 at 10:26 a.m.
Fredd Lopez directs insulation behind the sheetrock in a Montgomery Village residence getting a wall-insulation retrofit in Santa Rosa. cq fredd
Home buyers planning to update their new house with efficient windows or a modern furnace can just tack the cost of improvement onto their mortgage.
It's called an Energy Efficient Mortgage, and it works like this: Borrowers using federally insured mortgage programs, such as the Federal House Administration, can get up to $10,000 or 5 percent of the value of the home to put toward energy efficiency upgrades.
Similar programs, through groups like the Veteran's Administration, Fannie Mae and Freddie Mac, have slightly different ground rules, but their goals are the same — to provide incentives for homeowners to make older houses more energy efficient.
The FHA program has been around for decades, but it's become increasingly popular of late, said Elise Groves, a mortgage broker with First Priority Financial of Santa Rosa.
The heightened consciousness about energy efficiency and the increased percentage of loans that qualify locally are driving the increased interest, Groves said.
The borrower doesn't even need to qualify for the additional amount; the government backs it because everyone will benefit from the improved efficiency of the home, she said.
Groves has a borrower in Santa Rosa who took out an additional $10,000 to upgrade windows, insulation and weather sealing at a home she recently bought on Hoen Avenue. The borrower will spend an additional $70 a month paying the higher mortgage, but the energy savings will more than make up for it.
“That house is like night and day from when she closed escrow,” Groves said. “It's probably going to save her $125 a month on her PG&E bill.”
The loans do add a layer of complexity to a purchase, Groves said.
In addition to the building inspector and appraiser, a licensed energy rater has to test the home and estimate the value of the upgrades required. That costs another inspection fee and is just one more appointment to juggle during that hectic home-buying period.
It's also one more thing for the lender to consider, and some are more familiar with the process than others, Groves said.
