It’s not easy going green.
Oh, we all know there’s a push to do it. But let’s face it. It’s downright expensive. Where are you going to get the money?
Well, thanks to a salad bar full of recently passed and pending green legislation, it will soon be easier to finance these projects than ever.
Let’s start with the green opportunities already available to Minneapolis duplex owners:
- Energy Efficient Mortgage (EEM) -Already in place, this FHA-backed mortgage allows a buyer to purchase or refinance a principal residence of one to four units and incorporate the cost of energy efficient improvements into the mortgage. Best of all, the borrower does not have to qualify for or make a down payment on the additional funding.
The energy efficient improvements must be cost effective. In other words, you have to prove the cost of the improvement is less than the total value of the energy it will save you over its useful life.
As part of the American Clean Energy and Security Act now before Congress (more widely heralded for it’s cap-and-trade” carbon emmissions program), proposed additional incentives include:
- The FHA would directed to insure a mimimum of 50,000 new Energy Efficient Mortgages during the next three years, with the definition of an energy-efficient house being one where energy consumption is reduced by 20 percent after renovations.
- Freddie Mac and Fannie Mae would be required to increase the qualifying incomes of mortgage applicants by at least one dollar for every dollar of projected energy savings from efficient design, green construction or renovations. (Think of this as somewhat like being able to use 75 percent of a property’s rental income to help you qualify for a loan to buy it; except this is dollar for dollar).
- Loan applicants who live close to mass-transit lines or employment centers would receive similar concessions on their qualifying incomes.
- Appraisers would be required to consider energy improvements as part of a duplex’s appraised value.
- State governments would ensure property owners who go “off grid” by no longer using utility companies to provide power are not denied property hazard insurance.