Financing Efficient Homes

If you want your mortgage to reflect the fact that your house will be more efficient (and therefore your utility bills would be lower), for years your only real option was the energy efficient mortgage from the Federal Housing Administration.

These mortgages covered the cost of improvements to new and existing homes, but were slightly more expensive to cover their insurance premium. They were not widely sought - only around 3,000 energy efficient mortgages were issued in 2009.

However, this new article by the New York Times indicates that things on this front may finally be changing.

Fannie Mae, the government-backed company that sets lending standards for mortgages, said that by this summer it would unveil incentives for those who use part of their mortgages for energy-related improvements. And EnergyStar, a joint effort of the Department of Energy and the Environmental Protection Agency, is expected to introduce borrower incentives in New York, after running pilot programs in Colorado, Maine and Pennsylvania.

If a large organization like Fannie Mae can start recognizing the savings of energy efficiency, it could affect smaller lenders.

Another market barrier - the fact that appraisers do not necessarily quantify the value of energy efficiency modifications on homes - is being confronted as well :

At the same time, the Appraisal Institute, an industry trade group, said it was training members to better quantify the value of energy-efficient homes. It also said that it was developing a certification program for appraisers who want to specialize in energy-efficient homes.

Change isn't always swift, but it is coming!