Making Your Grass Greener

Why would you pay $350 to $600 for a rating? Lenders might require it, if you're borrowing money to add energy-efficient systems to your home. States might require it for people applying to affordable-home lending programs. In bum real-estate markets, a good rating might help sell your house--especially if you're listing with a green broker. For certified raters, go to resnet.us and energystar.gov. (But try any freebie from your utility first.)

Green mortgages --otherwise known as Energy Efficient Mortgages (EEMs). You usually qualify if you're buying a new Energy Star home or planning cost-efficient upgrades on an older home. Various types of loans exist; often, they let you borrow more money than would normally be the case. If the loan is done right, you'll be able to handle the higher monthly payments because you're saving so much on your energy bills. You might also get reduced closing costs. The largest program allows loans up to $417,000, depending on where you live, but it's possible to borrow up to $1 million or more. If you're upgrading a home, part of the money goes into escrow until the job is done.

In theory, any lender can offer EEMs. In practice, they're hard to find. Few banks have bothered with the programs or trained lending officers to handle them. People don't know they exist, so there's slim demand. And besides, most buyers can already borrow as much as they need.

But EEMs are good for extra financing, and lenders should soon catch on to their value as marketing tools. To find these loans, it's helpful to use a green mortgage broker. Look for the names of lenders and brokers on the Energy Star site. The Indigo Financial Group serves five states and is preparing to go nationwide. Indigo's Joel Wiese says his clients are saving 20 percent to 50 percent on their utility bills--more than enough to cover their higher mortgage payments.

One warning: beware the "greenwashers." Those are brokers and builders who say they're saving the planet but--like the Wizard of Oz--just give out green glasses, to turn a brown world into an emerald shade. Go beyond the press release. Be sure to get real green for your green.

Temma Ehrenfeld

© 2006