Federal Reserve chairman Ben Bernanke warned congress on Thursday that the central bank is keeping a close eye on the subprime mortgage crisis and the recent spike in oil prices.
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Today is the last day of the Federal Reserve meeting where the Fed is still expected to lower rates despite unexpected signs of strength in the economy.
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Ask Susan Webster what her dream “green” home would be like, and prepare to sit awhile. According to the Des Moines Register, the Iowa real estate agent is focused on promoting healthier, more environmentally friendly living.
Why might you consider an energy efficient loan? Consider:
It can enable a buyer to qualify for a larger mortgage if the borrower is purchasing a home with energy-saving characteristics.
If the house qualifies, the mortgage lender will often be willing to make the buyer a bigger loan because this individual will save money on monthly utilities. The savings allow the buyer to allocate a larger portion of his/her income to his/her mortgage than he/she could with a conventional home.
In other words: when saving money on utilities, the lender grants the borrower a greater debt-to-income ratio. This usually translates into the buyer qualifying for two percent more debt. That can be significant.
Not only can an energy efficient loan be used in the purchase of a new home (either existing or new construction), but it can also be used to make an existing home more energy efficient.
Buying a new home
1. Find the house that you want to buy and let the lender know that you want an energy efficient home loan.
2. Have an Energy Rater conduct a HERS (Home Energy Rating Systems) report on the house. A HERS report looks at the home’s insulation, windows, the local climate and utility rate to give the home a score. The report includes the rating, any recommended upgrades, the score after any upgrades, and the total energy costs before and after upgrades.
3. The lender gets the home’s energy ratings report.
4. If the home qualifies, the home loan lender then increases the borrower’s qualifying ratios, usually by 2 percent, so that the borrower can buy a more expensive house if the energy efficient home costs more.
5. Finally, there is a closing just like with any home sale.
If you want to improve your existing home, mortgage refinancing to an energy efficient loan may also be an option. Sometimes, lenders will roll the expense of cost-saving into a new energy efficient loan.
The monthly mortgage payment may go up somewhat, but after the upgrades, the utility payments should decrease by more than the payment rises. If this is so, more money becomes available for the mortgage. If you are interested in refinancing into an energy efficient loan, the process is likely to be as follows …
Upgrading an existing home
1. Inform your lender that you want to refinance to an energy efficient loan.
2. Have an Energy Rater conduct a HERS report (see above).
3. The lender puts funds in an escrow to pay for the improvements.
4. You close on the energy efficient loan.
5. After the improvements are completed, the escrow is cleared.
Whether improving an existing home or buying a new one, an energy efficient loan can enable you to buy a better, more efficient house. However, it is important to crunch the numbers for yourself. Know the current utility costs and compare those with the estimate of what you will pay after the home improvements.
SOURCE: Lending Tree
The fact that mortgage refinancing is on the rise nationwide, as interest rates are falling, is far from a coincidence.
A recent survey by GuideToLenders.com, a mortgage resource for consumers, showed 34 percent of homeowners who refinanced between August and October did so to obtain a lower interest rate.
The Energy Information Administration (EIA) expects increased rates for heating oil and electricity* this winter; these rising home heating expenses may be propelling some homeowners to offset such costs through lower rate mortgages.
“Interest rates are constantly fluctuating, so it’s difficult to time your loan so that you’re getting the lowest rate at any given time. Shopping around for a good rate may be easier if you find a loan officer who can help you compare loan packages at several financial institutions,” advises Francine L. Huff, author of “The 25-Day Financial Makeover: A Practical Guide for Women.”
According to the EIA, 62 percent of homes use heating oil and electricity as their primary means to heating their homes. Combine EIA’s expectations with the National Oceanic Atmospheric Administration’s (NOAA) prediction that this winter will be 8 percent colder than last winter, and many Americans could see a jump in household expenses.
In the Northeast alone, households may pay seven percent more in heating oil energy costs this winter compared to the previous winter. It’s not hard to see why this would lead many to look into a home mortgage loan refinance.
GuideToLenders.com’s. survey also revealed that 13 percent of consumers were concerned about fast loan processing, and 4 percent cared about customer service.
* Click here to learn about ways to reduce your energy bill.
With winter fast approaching, and the cost of natural gas and oil still far above historic norms, many Americans are feeling the heat (no pun intended) in their efforts to stay warm. On top of property taxes, insurance and yes, home mortgage loan payments every month, this is not something to take lightly.
That said, here are six simple steps - courtesy of the Alliance to Save Energy (ASE) and CNN Money - that could save you big on heating bills and help protect the environment.
1. Clean your furnace filter. This could be as easy as cleaning the lint from your dryer, says ASE spokeswoman Ronnie Kweller. Or it could entail running to the store for a $10 replacement, she says.
Although hard to quantify, your furnace will struggle less, and hence will be more efficient, if it doesn’t have to keep pushing hot air through a clogged filter. Also, get the furnace tuned up at least once a year by a professional to further boost efficiency.
2. Get a programmable thermostat. For about $100, you can tell one of these devices to automatically turn down the heat or air conditioning when no one is home, like during the workday, and that alone can shrink your heating bill by about 10 percent - and when your homeowner’s insurance and taxes are already sky-high, that’s nothing to sneeze at.
3. Take advantage of the sun. This doesn’t even require any extra spending! Just remember to open up the curtains on south-facing windows during the day, close all the curtains at night, and let the sun help naturally heat your home. If you’re building a new home, see about green mortgages along with other eco-friendly options offered by the builder.
4. Turn down the hot water. Kweller says most hot water heaters come with a default water temperature setting of 140 degrees Fahrenheit.
“That’s hotter than you need for showering and dish washing, and can risk scalding,” she says, recommending 120 as a safer, more efficient choice.
If you’re in the process of home remodeling and are in the market for a new water heater, a tankless variety that heats water up only when needed, using 30 percent less energy, is a smart move. Also, using cold water to wash your clothes can save up to $68 a year on water heating bills.
5. Insulate and seal. It might be worth taking out a home improvement loan and adding an extra layer of insulation to your roof or walls, and using caulking, foam or weather stripping to seal cracks around windows, light fixtures or electrical outlets. It not only saves energy, it can get you a tax break as well.
6. Upgrade your windows. Ones that carry the government-stamped Energy Star rating label, both for efficiency and to take advantage of a tax deduction, are great for insulation. Energy Star windows, which will be either double or triple paned, start at around $300 each.
“It’s a big investment, and we don’t think people should do it just for the tax credit or energy savings,” Kweller says. “But if you need new windows anyway, definitely go for Energy Star.”