If your dream of homeownership wouldn’t be complete without the most energy efficient appliances and upgrades out there, a “green mortgage” might be exactly what you’re looking for.
Green mortgages, also called energy-efficient mortgages or EEMs, make it easier to borrow the additional funds required to make green updates to your new home. As an added bonus, some mortgages that fall into this category also offer lower interest rates or lower fees for homes that are already certified as energy efficient.
The Benefits of a Green Mortgage
With an energy-efficient mortgage, you could radically transform your new or used home – adding anything from energy-efficient windows to solar panels, high efficiency heating and cooling systems, added insulation, and more.
Likewise, you can also use an energy-efficient mortgage to purchase a home that already meets a high standard for efficiency and energy consumption.
By wrapping the costs of these upgrades into the cost of your mortgage, you can pay them down slowly over time. Plus, you may be able to secure a higher benefit if you claim the mortgage tax deduction already.
In certain cases, you could even secure tax credits for installing certain energy-efficient appliances and systems in your home. Since the majority of these credits are for new purchases and installations only, you’re more likely to benefit if you’re using a green mortgage to update an existing home.
In addition, however, you can also check with your local utility company to see how your new upgrades might work in your favor – for example, in some cases, homes with solar panels are able to sell “unused energy” back to their local utility company for a profit.
Alternatives to a Green Mortgage
Not sold on a green mortgage yet? Even if you’re still considering it, it makes sense to consider every other option on the table.
The good news is, there are plenty of other ways to finance any upgrades you need to make to improve your home’s energy efficiency and reduce your family’s carbon footprint. Here are a few additional financing plans to consider:
- Home Equity Line of Credit (HELOC) – Provided you have enough equity in your home to qualify, you might be able to borrow the cash you need with a Home Equity Line of Credit, or HELOC. These low-interest loans use the value of your home as collateral, and often offer some of the lowest interest rates around. As an added bonus, the interest you pay on your HELOC may be tax deductible.
- 0% Interest Credit Card – If you don’t want to go through the stress of qualifying for a loan, you could always sign up for a 0% intro APR credit card instead. These cards offer 0% APR introductory offers that can apply to both purchases and balance transfers, making them a smart solution for homeowners who want to make upgrades without paying interest for a limited time. With certain 0% interest credit cards, you can get up to 21 months with 0% APR on purchases.
- Personal Loan – If you would rather, you can also consider a personal loan for your energy efficient upgrades. While there are fewer benefits with this option, it can be smart if you have an aversion to credit cards and don’t have enough equity in your property to qualify for a HELOC. If this is an option you’re considering, you can apply for a personal loan at a bank, your local credit union, or even online.
If you’re worried about your family’s carbon footprint and want to do everything you can to preserve this planet for the next generation, building or buying an energy efficient home is one of the smartest things you can do. With a green mortgage, it just becomes easier and a lot more affordable.
Holly D. Johnson
Holly Johnson is a financial expert and award-winning writer with an obsession towards frugality, budgeting, and travel. In addition to serving as Contributing Editor for The Simple Dollar, Holly writes for U.S. News and World Report Travel, Personal Capital, LendingTree, and Frugal Travel Guy. Holly is the owner of the websites Club Thrifty and Travel Blue Book.
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