Maintaining an energy-efficient home is not only helpful to the environment, but it can also help you save money and live more comfortably. If you are building a new home, you have the option of adding energy-saving features during the construction process. If you live in an older home, you can make improvements and install new appliances to make your home more energy efficient. Choosing energy-efficient windows, sufficient insulation and energy-saving appliances can significantly lower your utility bills and leave you with more money to spend on other things.
[box_dark]What is an Energy-Efficient Mortgage?[/box_dark]
When you apply for a home loan, most mortgage lenders will consider your debt-to-income ratio when reviewing your application. If you have an adequate monthly income, but your monthly expenses are high, you may not be able to qualify for the type of home you want. An energy-efficient mortgage allows you to qualify for a larger mortgage when you buy a home with energy-saving features. Because youâ€™ll be spending less money on utility bills, you can use more of your income to spend on your house payments. Typically, this means that the lender will allow you to have a higher debt ratio.
If you have an older home, and you want to make it more energy efficient, you may be able to obtain financing for all or some of the necessary improvements. As an added benefit, the cost of the improvements can usually be added to your existing loan, and you wonâ€™t have to take out a second mortgage.
[box_dark]How Energy-Efficient Mortgages Work[/box_dark]
Although it may seem too good to be true, most lenders are willing to loan you more money when they know your monthly bills will go down. If you are buying a new home that has energy-efficient features, your lender will estimate the amount of money that you will save on your utility bills and allow you to borrow that much more on your loan. This way, you can get the home you really need and also save money and natural resources. If you want to upgrade your home and make it more energy-efficient, the lending process is similar to that of financing a new loan. Generally, your lender will loan you money based upon the cost of improvements and the amount of money that you can potentially save each month. Because your utility bills will be much lower, you can easily afford the new loan payment. Read this Guide to Green Mortgages/Energy Efficient Mortgages to give you more information on how this type of mortgage works.
[box_dark]Qualifying for an Energy-Efficient Mortgage[/box_dark]
If you are buying a new home, itâ€™s very likely that the builder has designed the home to be as energy efficient as possible. In fact, most builders use this as a selling point, so all you have to do is apply, and the lender will do the rest. When you apply for improvements on your existing loan, a trained inspector will rate your homeâ€™s current level of energy efficiency and recommend improvements that can save you money. If your application is approved, the lender will deposit the necessary funds into an escrow account, and you can begin searching for contractors to complete the work. See this Energy Efficient Mortgage Home Owner Guide.
If you want to save money on your utility bills and live in a comfortable, modern home, obtaining an energy efficient mortgage may be the best thing for you. Whether you decide to build a new home or make improvements to your own home, going green can save you money and allow you to live in the home thatâ€™s right for you and your family.