Home Energy Use Will Be Part of the Mortgage Process
Industry experts tell me it won't be long until energy use for a home will be part of the mortgage approval process.
It makes sense to include utility costs in the overall financial picture in purchasing a home. As energy codes evolve, more homes will have a HERS rating or meet some other type of energy efficiency rating. So the mortgage lender will add energy costs to the standard principal, interest and taxes (and private mortgage insurance when applicable) calculation.
The appraisal industry is responding with green valuation tools. And the real estate industry is contributing as well by adding green information to multiple listing services.
Including the energy costs in the mortgage qualifications could help a homeowner avoid buying a home that may put a strain on their monthly budget.
More importantly, it can reward green homebuilders and buyers by recognizing the value of a lower total cost of ownership. Say a home with a low HERS score costs a little more than a similar but lower performing home in the same neighborhood. The homebuyer could qualify for the more expensive home because the actual monthly expenditure might be the same or even less than the cheaper house.
Eventually, we hope homes have energy use tags just like appliances and entertainment devices. Every refrigerator, dishwasher and widescreen TV has a yellow and black Energy Guide tag that estimates how much it will cost to operate for a year.
In some regions builders are required to disclose the home's HERS score, or at least the nominal value calculated for a particular floor plan.
There are Energy Efficient Mortgages available today for new construction and upgrades to existing homes available through FHA, Fannie Mae, and Veterans Administration lenders.
Look for the concept to spread to the broader real estate market as the drive to reduce home energy use continues.
This blog was developed by Fox Blocks. All posts, sponsored and un-sponsored have been reviewed and approved by the Sustainable Community Media Editorial Team to ensure quality, relevance/usefulness and objectivity.
Companies: Fox Blocks
David Morris A Detroit native, David T. Morris, LEED® Green Associate, used his drive for entrepreneurship, innovation & new product development to develop a patented product and later took a new building product to market. In 2012, he became U.S. East Regional Manager with Fox Blocks, a division of Airlite Plastics Company, managing ICF sales in seven states. Since 2006, David has delivered more than 140 IFA/ICF training seminars to contractors, plus another 120 presentations to architects and engineers. He is a featured speaker and SME on High-Performance Buildings, and his efforts have resulted in environmentally friendly construction being specified for residential, commercial, and institutional buildings throughout the country.