Will energy efficiency help SAVE you money on your mortgage payments?
The Sensible Accounting to Value Energy (SAVE) Act, bipartisan legislation pending in the Senate, would require major federal mortgage players to improve their rules to better acknowledge and reward home energy efficiency.
According to the Washington Post, a national study tracking home loan payments found that energy efficient properties are 32% less likely to default on their mortgage. This makes sense – home energy improvements can help save homeowners on their utility bills, freeing up money to go towards other living expenses (like a house payment).
Energy efficiency DOES provide important value to a home. The goal of the SAVE Act is to put a stronger emphasis on a home’s projected energy savings by integrating it into mortgage underwriting and including it as a factor in determining the value and affordability of a home. A June story in the New York Times notes that a “household’s average energy costs can run more than $70,000 over the life of a 30-year loan.” That’s greater than the real estate taxes and insurance payments that ARE currently included in the U.S. underwriting process. While accounting for energy efficiency in mortgages and appraisals is more common practice in other countries, the United States has yet to follow suit.