Green Mortgages

With all the talk of the sub-prime mortgage crisis and the glut of foreclosures, why not talk about something positive when it comes to getting a mortgage and living a greener lifestyle.  I’m not yet a homeowner.  The real estate market is just too out of reach for first-time homebuyers like us.  That’s why we plan to move by the end of the year.  Ideally, I’d like to be in our first home by the Summer of ‘09.   In the meantime, I like to keep up on the trends of the current housing market and mortgage market including “green mortgages”.

The idea of green mortgages reportedly started in 1979 with President Jimmy Carter.  His idea was to make lenders offer incentives to consumers to buy or make their current homes more energy efficient.  It’s amazing to think that at the time, our President had the forethought even then to help out our environment!  The savings of energy efficient homes can often be considered income, allowing some families to purchase a bigger house.  These days lenders that offer green mortgages often set them up in different ways.

The first is a lender’s discount to purchase an energy efficient home.  Some will take a chunk of money out of your closing costs while others will give borrowers more credit and a small amount of money off the closing costs.  If you’re buying an older home, some lenders will qualify the buyer for more than the purchase price of the house.  This extra money is for you to put toward upgrading insulation, installing energy efficient windows and a/c units.  The long-term savings of those upgrades is factored into your income, thus allowing you to qualify for more house.

But, there are some catches because it’s not just free money.  If you don’t make the upgrades and squander away the extra money the lender qualified you for, they could put an escrow on that amount of money when you go to sell your house.  So, it’s essential that if you’re going to make the commitment to the lender to make your home more eco-friendly that you follow through on your end of the deal.  Many states are also offering incentives now as well for the purchase of a green home.  To find out more, you can head to the National Association of State Energy Officials website to find contact information for your state energy representatives.  Then you can ask them what incentives they’re offering for energy efficient homes and renovations.

A green mortgage is just another simple step in the process of living a greener life, proving it truly can be easy going green!