House Buying Goes Green with Fannie Mae Energy Mortgages

energy efficient home mortgage

Housing developers and new home buyers are following a smart path. They are incorporating whole-house energy efficient systems in the planning phase of residential construction and installing energy efficient upgrades when buying older homes that are desirable for their charm and character. A home that has a good home energy score sells faster and increases the value of the home. The U.S. Department of Energy created the Home Energy Score to reflect the energy efficiency of homes based on the following three factors:

  1. Home Structure – windows, doors, insulation, air sealing, natural lighting and walls that act as air and vapor barriers.
  2. Space Heating and Cooling – passive solar powered HVAC systems and cool roofs which use a highly reflective material to keep the home cooler in the summer.
  3. Water System – low-flow shower heads, faucet aerators, high efficiency toilets, hot water pipe insulation and solar assisted hot water tanks.

As an incentive to home developers to include energy efficiency systems in residential development, Fannie Mae has unveiled new energy mortgage financing vehicles that will assist borrowers seeking to purchase or refinance homes with a good Home Energy Score or make renovations to existing homes.

The Fannie Mae “Homestyle Energy” Mortgage

The Homestyle Energy Mortgage can be used to refinance improvements in a home to increase the home’s energy and water efficiency, and it can prove to be a more affordable option than a home equity loan. State, local and federal agencies are actively pursuing ways to motivate green building and remodeling projects to promote the efficient use of natural resources, because reductions in home energy and water consumption lessen the burden on the utilities infrastructure.

The Homestyle Energy loan can be combined with other standard Fannie Mae products such as the Home Ready mortgage which is geared towards low to middle income borrowers. Use this refinancing vehicle to make such upgrades as installing water efficient toilets and showers, upgrading HVAC and hot water systems, replacing windows and doors, and installing attic and crawl space insulation.

Why Building Energy Efficient Homes is a Win for Builders

Now, more than ever, buyers desire homes that are cost-efficient; a home that offers value and even some return on their investment. Builders also recognize that today’s consumers are environmentally aware and practice increasingly earth-friendly lifestyle behaviors. Reducing costs with energy efficiency has become a priority for those looking to build or purchase new homes. Residential developments with a favorable Home Energy Rating System (HERS) index not only sell faster initially, but the home value is higher at resale.

Upgrading from housewrap to a high performance air and moisture barrier, like DELTA®-VENT SA, is a good way to achieve a lower HERS rating.

Smart builders are those that are following the green building trend, knowing that it the way of the future. A builder can gain industry promotion through the LEED program for builders and developers, which recognizes and celebrates leadership in green home building. With each home project completed, builders earn points towards obtaining the prestigious LEED certification, after inspection and grading by a third party-verified rating system. .

Why It Makes Sense to Buy an Energy Efficient Home

A Washington Post article cited studies which support the fact that homes that feature energy-saving appliances and whole house energy efficiency systems sell for more than houses without them. As a matter of fact, a green certification label on a house adds an average of 9 percent to its selling value. Other benefits of buying an energy efficient home are improved indoor air quality, reduced costs on heating, cooling and water usage, higher home comfort levels, government tax incentives, and of course, the higher resale value.

If you are seeking a home developer, consult with a builder who is willing to enter into a Memorandums of Understanding (MoUs) to have the homes rated for energy performance. If you are an existing home owner, consider having your home rated for energy efficiency with an energy audit. That way you will know how your home ranks and what you can do to improve on your home’s energy consumption.

Cosella-Dörken delivers innovative, high-performance air and moisture barriers for commercial and residential construction sold under the DELTA® brand name. A North American manufacturer based out of Beamsville, Ontario, Cosella-Dörken Products, Inc. is a subsidiary of Ewald Dörken AG, a leading European developer and manufacturer of waterproofing and drainage products sold worldwide. Cosella-Dörken is known for delivering premium products while providing educational programs and full technical support. For more information, call 1-888-4DELTA4 (433-5824) or visit www.cosella-dorken.com.