Financing for Energy Efficient Homes

One of the major obstacles to widespread acceptance and use of renewable energy technology in home construction has been the difficulty in finding financing that recognizes and rewards homes for their energy efficiency. Lenders have looked upon passive solar building techniques, solar power or alternative materials as a negative when considering a project for financing.

Let's say you want to build a home on your new piece of property but the site is located over a mile from the nearest power line and the Power Company tells you it will cost $30,000 to get power to your homesite.

Generally speaking you can get away with paying the Power Company about half of that amount and compensating for the rest with a higher minimum bill. In this example you pay $15,000 to the Power Company to have the lines run to your site and agree to accept a minimum billing of $50/month instead of paying the full amount.

Spending that $15,000 on a renewable energy system and thereby saving yourself the $50/month additional expense makes sense even from a financial standpoint. Yet, historically, lending institutions have willingly loaned money for grid connections even though such a connection often reduces your ability to repay the loan, and have been loathe to loan money to install a power system that would increase your ability to repay the loan.

Go figure.

But now that is beginning to change. According to an article printed in the latest issue of Home Power magazine, GMAC Mortgage company is now willing to finance solar installations and energy efficient features in both new and existing homes. With a company as large as GMAC (General Motors Acceptance Corporation) involved, it could be evidence of a change in attitude in the mortgage industry as a whole.

The article, submitted by GMAC Mortgage and written by Stephanie Harmon, GMAC's Manager of National Business Development, outlines their approach in considering energy efficient homes for mortgages.

Stephanie writes: "When energy efficiency is included in a home design, higher monthly house expense and debt payment ratios can be justified because of the potential for lower monthly energy expenses." She further states that: "…quantifiable savings due to solar energy improvements can be deducted from the monthly principal, interests, taxes and insurance when borrowers are considered for loan qualification."

Basically, GMAC is saying they will recognize a renewable energy system as a value rather than a liability and you would be viewed as having $50 more a month for mortgage payments (in the above example) with the RE system than with a grid connection.

I spoke with Stephanie earlier this week and she expanded on the information presented in the article. She told me that not only does GMAC consider energy efficiency an asset in financing a new home, but that they were consciously looking for ways to understand the renewable energy market, including working with large solar component producers like BP Solar.

I asked her about other kinds of alternative construction, such as straw bale homes and Earthships. She said they had already provided mortgages for straw bale construction and would be glad to include the Earthships once they became familiar with them.

This is a big step towards getting alternative technologies accepted by the mainstream and making them available to more people. Let's hope that GMAC is only the first to get involved in this market.

Anyone wanting further information on GMAC's solar financing can contact Kolby Oheron at GMAC Mortgage Corporation in Englewood, 303-773-6663 or Liz Bryant, Regional Manager for GMAC at 303-409-7717.

On a more personal note, I was very distressed to learn from Helen this week that this issue of the Greater Guffey Community News would be her last! I sincerely hope that she changes her mind. This newspaper is one of the best small papers in Colorado and has quickly become a focal point of our community. Yes, there is controversy. Yes, there are those who "blame the messenger". And, yes, we are often all too willing to take it for granted.

But a good newspaper is an important part of any community and if we lose the Greater Guffey Community News we will lose an important voice for this community. Thank you, Helen, for giving of yourself so fully and dedicating yourself to this community. And thank you for giving those of us with something to say a place to say it.

All Contents © 1999
Wagonmaker Press
Thomas W. Elliot

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