As shared by the Rocky Mountain Institute: Every day, thousands of Americans make the biggest purchase they’ll make in a lifetime—their home—without knowing the true cost. In spite of stringent post-recession safeguards intended to protect homeowners and hold lenders to a higher level of accountability, there’s more we can do.
Right now, there is an unprecedented opportunity to transform the mortgage industry for the better, ensuring lower-risk loans for lenders, and higher-value, better-quality, and more equitable homes for homeowners. Legislation, regulation, and market forces are all aligning to appropriately take into consideration energy consumption in mortgage underwriting.
The typical American family spends more than $2,500 per year on energy bills. Utility bills are a major household expense, typically greater than either real estate taxes or homeowners insurance. But they are currently not included in home appraisals or mortgage underwriting. This puts homeowners at risk of not being able to afford both mortgage and utility payments, and puts lenders at risk of higher default rates. A study by the Institute for Market Transformation (IMT) and the University of North Carolina found that energy efficient homes had a rate of default 30 percent lower than standard homes. Continue reading from the Rocky Mountain Institute here.