Got a Green House? Consider a Green Mortgage

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A green mortgage is designed to help make homes and businesses more energy efficient.

Going Green

As you probably already know, America is "going green." Everything from cars to water treatment is becoming more energy efficient, and it's not just about the environment. More efficient almost always means less expensive to operate. Technology has advanced to the point where a green mortgage is a very practical solution for upgrading a home you already own or one you are considering buying.

The Problem

As a homeowner, you qualify for tax credits and rebates from the federal government for upgrading your home and making it more energy efficient. The problem is that not all of us can afford these upgrades. Depending on what you do, it can cost thousands or tens of thousands of dollars to upgrade. That's where a green mortgage comes in.

Win, Win

Because of expected savings on monthly utilities, these loans allow buyers or owners to finance more than they could normally qualify for. The savings on utilities translates into more money a homeowner can use to pay the mortgage. It can be as much as a few hundred dollars per month. There are other reasons lenders want you to upgrade as well. The more energy efficient a house is, the better. It will use less in utilities and be healthier and more comfortable to live in. It will also be more appealing to prospective buyers. In short, it will be worth more. So, lenders may also offer "green home" owners or buyers lower interest rates and other perks like lower closing costs. This means everybody wins.

Who Can Get One

Green mortgages are available for virtually any kind of loan: loans for first-time home buyers, refinances and new construction as well as commercial loans. There are a number of lenders who deal exclusively in green mortgages, and more and more mainstream lenders are creating green options.

Home Energy Audit

Whether you need to replace leaky windows or an old cranky boiler, you need to find the things that will make the greatest difference to your comfort and save the most on your utility bills. A good place to start is a home energy audit. It's not free or even cheap, but the audit will help you pinpoint the thing or things that will make the greatest difference to your utility bills. You will probably need one to get the tax credits anyway; read the federal guidelines before you do anything.

Remember, with a green mortgage you are trading lower utility bills for a higher mortgage payment. Look at these loans carefully and make sure to choose one that covers the cost of your upgrade without substantially raising your mortgage beyond what you expect to see in energy savings. Ideally, you won't have to pay more to be cozy this winter.