The Benefits of an Energy Star Mortgage in Texas

Recently, the U.S. Department of Energy, in partnership with the U.S. Environmental Protection Agency, the Energy Programs Consortium (EPC), state energy and housing agencies and the Ford and Surdna Foundations, began their pilot program for the Energy Star Mortgage program in Maine and Colorado.  The Energy Star Mortgage program is a federal incentive to encourage homeowners or prospective buyers to purchase a home or install energy efficiency upgrades through a lower interest rate.  According to energystar.gov, “This innovative mortgage pilot program offers borrowers an opportunity to lower their energy consumption while making significant, affordable improvements to their homes.”

 The next targets for this program’s expansion are Massachusetts, New York, New Jersey, Pennsylvania and the District of Columbia; however, I think it is important for Texas lawmakers to work to bring this program to Texas, and specifically Austin.  This program fits in well with Austin’s self-stated goal of becoming the ‘Clean Energy Capitol of the World’ and could also provide some relief for homeowners who are stuck with poor interest rates.

Colorado has already created a website with information on the Energy Star Mortgage program for lenders, builders and other prospective participants, which gives examples of refinancing and solar energy system financing.  Below is an example of a mortgage refinance with the installation of $10,000 worth of improvements which yield a 30% reduction in home energy consumption.

A homeowner could potentially increase the value of their house while reducing mortgage payments and energy consumption.  The improvements in this case could be anything from weatherization to a solar powered hot water heater.

Another example is refinancing a home mortgage to pay for a photovoltaic solar system.  In this example, the system costs $30,000, with federal and state rebates and tax credits bringing this down to around $11,000.  In the example, the utility rebate for Colorado is $13,750, whereas with Austin Energy, the rebate would be slightly less due to a difference in $0.20 per Watt returned.

In each of these cases, the homeowner can save money in the long run due to reduced energy consumption and a reduced mortgage rate.  I believe that this initiative should be brought to Texas in the next group of pilot program states.  The benefits would include a potential reduction in foreclosures (due to stable, reduced interest rates), increase in jobs (due to construction and other improvements), and overall reduced energy consumption proofing this program.

References:

What is an Energy Star Mortgage?

http://www.energystar.gov/index.cfm?c=bldrs_lenders_raters.pt_lender_mortgage

Energy Star Mortgage info for Colorado

http://nocoenergystarhomes.org/mortgages/introduction.pdf

Solar Incentives for Texas – Austin Energy

http://www.dsireusa.org/incentives/incentive.cfm?Incentive_Code=TX11F&re=1&ee=1

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