Federal tax credits, green mortgages and other loans

A quick overview of (1) Federal tax credits, (2) taking out a Green Mortgage (an EEC) and (3) the coming PowerSaver loans.

Tax Credits: As of February 17, 2012, all federal programs have closed and no more rebates are available for purchasing and installing energy efficient products (more here).

Green mortgages (Energy Efficient Mortgages): this is complex stuff but the idea here is that you borrow from a lending institution (e.g. a bank or mortgage company) to pay for energy efficient upgrades. Though the loan is created separately from your primary mortgage, it is rolled into your primary mortgage so you only make only one payment per month. In my opinion EEMs make sense for those buying a home or condo or refinancing their existing one. But I assume current homeowners can work something out too. According to Federal Housing Administration (FHA) who insure these loans, the improvements can be included in a borrower’s mortgage only if their total cost is less than the total dollar value of the energy that will be saved during their useful life. The cost of the improvements that may be eligible for financing as part of the mortgage is either 5 percent of the property’s value (not to exceed $8,000) or $4,000, whichever is greater. Read up more here and here and here.

PowerSaver - this is a plan by the federal Department of Housing and Urban Development (HUD) whereby homeowners in select cities have an opportunity to obtain loans for solar panels and other improvements on single-family homes. The loans would be made by private lenders and there will be a $25,000 cap. The good news is that this might help bring down the cost of solar panels and other energy efficient appliances and systems. The bad news: none of the banks so far seem to be here in Los Angeles. For further reading, here is the April 21, 2011 press release.