Connection between Energy-Efficient Homes and Mortgage Payments
June 26th, 2013
June 26th, 2013
A jointly produced study by the University of North Carolina’s Center for Community Capital and the Institute for Market Transformation, a Washington, D.C. based non-profit, found that people who own Energy Star-rated homes are less likely to default on their mortgages.
The study, which looked at 71,000 homes across the U.S. between 2002 and 2013, discovered that Energy Star-rated homes are 32% less likely to have their mortgage defaulted on compared to homes with no energy efficiency upgrades. The thought behind this is that owners of energy efficient homes take the money they save on their monthly utility bills and use it toward paying their mortgage each month.
As a result of these findings, the study’s authors suggest that lenders should provide homebuyers with reduced fees or lower mortgage rates based on how energy efficient the home that they’re buying is. They also propose that banks should consider this data when they underwrite home improvement loans. It’s theorized that if more loans were underwritten based on the energy efficiency of the home, more middle class homeowners may install more energy efficient systems.
However, the study’s authors do admit that homeowners of energy efficient homes may be less likely to default on their mortgages simply because they’re more financially sound than owners who live in less efficient homes. Unfortunately, the study didn’t review the income of the surveyed owners of the energy efficient homes.
But upgrading to energy efficient features does pay for itself over the lifetime of the home through lower energy costs.
A home (three stories or less) can be Energy Star-rated if it has been verified to meet EPA guidelines through an independent Home Energy Rater. Some of the features of an Energy Star home include:
If you’re looking to improve your home with energy efficient features and require a home improvement loan, contact Grandview Lending. Our loan specialists will work with you to find the right loan that meets your needs.
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