Energy Efficient Mortgages Reduce Your Monthly Housing Expenses

When a lender figures the monthly mortgage amount that a buyer can afford whether it’s a purchase or a refinance, the amount is calculated to include principle, interest, taxes and insurance or PITI.  But there’s another cost that is beginning to be taken into consideration—utilities.  If you buy an older home with old single pane windows, old appliances, an old furnace, poor insulation, etc., the monthly cost to own the home can increase dramatically.  If you don’t have the money to replace some of these items immediately you could spend hundreds of dollars more each month on energy   costs.  And if you decide to make some of the improvements or buy appliances on your credit card that just adds to your debt at pretty high interest rates.

But the FHA 203(b) loan, or Energy Efficient Mortgage (EEM) Program can help buyers and refinancers to make their homes more energy efficient and save a considerable amount on their monthly utility bills.  “The EEM Program recognizes that the improved energy efficiency of a house can increase its affordability by reducing operating costs.  Because the home is more energy efficient, the occupants will save money on utility costs” and significantly reduce the amount of money needed each month to operate the home. So here’s how it works.  When you take out an FHA 203 (b) loan you can add up to $8,000 to the loan amount even if it goes over the FHA maximum loan amount or over what you qualify for.  This additional amount is at the same rate as the original loan.  So if you lock in at say, 4.25%.  The additional amount is rolled right into the loan at the same rate. Here are some of the things you can do to improve your home’s value and energy efficiency: New windows, insulation, passive or active solar improvements, heating and air conditioning systems, appliances.  Now needless to say $8,000 won’t cover all these things.  So the borrowers needs to determine what things they want to do and how much it will cost.

Prior to settlement the borrower submits a home improvement energy package and the costs to the lender.  Then a HERS  (Home Energy Rating System) energy rater has to inspect the property to determine whether the cost savings over the life of the loan will be greater than the loan amount.  The buyer, seller, lender or agent can pay for the cost for the inspection.  Once the rating assessment has been done and a satisfactory rating has been determined, the lender can escrow the amount of money in the proposal.  All work must be completed within 90 days. Most lenders don’t even know about this loan or if they do they don’t offer it.  Don’t ask me why.  So I was very happy when I found a wonderful loan officer at PMG Mortgage who made it his business to research the loan and convince his company to offer it to borrowers. Vince Coyle  is ready and willing to work with borrowers on this loan product.

Given the low interest rates right now this loan is an excellent way to get a lot more bang for your energy efficiency buck.  Plus, after you make some of these improvements most states have some tax credits and incentives that you might be eligible for.  Here are the federal tax credits that are available now.

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Gale10

Gayle Fleming

http://www.goinggreenhomesva.com

gaylefleming48@aol.com

703-625-1358

My purpose is to serve my clients and advocate for their highest and best good, so they attain their real estate goals.

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How Many Light Bulbs Will It Take To Change The World

While we wait for the government to make up its mind about carbon credits and/or carbon and gas taxes, the easiest and fastest thing we can do to cut our personal carbon emissions and save money is to change every single light bulb we use to CFLs.  I’m sure there’s no one reading this blog hasn’t already heard this.  I’m going to attempt to debunk some of the excuses I’ve heard for why people aren’t changing their bulbs.

But before I do that,  I’d like to note that since buildings consume 40 percent of all the energy used in the U.S and 70 percent of all the electricity, it is imperative that those of us who daily contribute to this astonishing number take some responsibility for reducing it.  The first place that we all have control of is our homes.  Another astonishing number that I would like to sear into your brain is that the 300+ million people in the United States consume fully 25 percent of all the energy in the world!

There is no doubt that governnments will have to step in to do the heavy lifting.  Some state governments are taking the lead.  Californians for instance, because of policies put in place by the state, currently produce less than half of the green house emissions of their fellow Americans.  California’s per capita electricity consumption has stayed flat for the last thirty years while the rest of the country has doubled it’s consumption, according to research from the Natural Resources Defense Council (NRDC), one of the nation’s most important environmental advocacy organizations.

So to address the “why I haven’t changed my light bulb” excuses:

1.    They’re too expensive.

CFLs do cost more than incandescent bulbs. But, they last for up to 10,000 hours.  So you’ll replace them every few years, not every few months.  Besides that, prices have come way down especially if you purchase them in the big box stores like Home Depot.  A four pack of  14watt bulbs (the equivalent of a 60 watt incandescent bulb) is only $5.85.

2.   What about the mercury?

“An average CFL contains 4 milligrams of mercury. That tiny quantity of mercury — essential for the energy efficiency of CFLs — is about the size of the tip of a ballpoint pen and is far less than the mercury inside other common household objects. For example, watch batteries have 5 times the mercury and older thermometers have 500 milligrams, equal to 125 CFLs.” (NRDC website) Home Depot has a recycling program for CFLs .  Also check with your city or county since they may have a recycling program for CFLs as well.

3.   What if I break one?

CFL’s last so long that there’s less chance of breaking one.  Read more about CFLs and what to do if you break one.

4.   I don’t like the light from CFLs.

It’s true the light is different in CFLs .  So you’ll probably have to adjust your expectations.  This isn’t much different than when we change anything  in our lives to something we’re not used to.  Here is an interesting article about one homeowner’s experience as she made the switch from incandescents to CFLs.

When you’re ready to buy or sell a home, call me, your going green real estate advisor.

Gayle Fleming, Keller William Realty

 www.goinggreenhomesva.com              gayle@goinggreenhomesva.com        703-6251-358   

Follow me on Twitter@ecogayle

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