Could Lenders Start Factoring in Energy Costs?

November 1, 2011

Rising utility bills can greatly affect a home buyer’s ability to afford a house, sometimes even more so than property taxes or home owner’s insurance. As such, a new bill introduced in the Senate is calling on lenders to start taking into account a home’s energy costs in standard mortgage underwriting—right along with principal, interest, taxes, and home owner’s insurance. 

The bipartisan bill, SAVE Act (Sensible Accounting to Value Energy) would require the three major mortgage agencies—Fannie Mae, Freddie Mac, and the Federal Housing Administration—to factor energy costs into every loan they insure, guarantee, or buy. To gather estimated costs of energy bills on a home, lenders would gather data from previous utility bills or from an Energy Department survey database. 

The bill also calls on the mortgage agencies to instruct appraisers to raise their property valuations when energy efficiency savings on a home can be shown. The higher value could thenbe used by a buyer to justify a higher loan amount if needed. 

Source: “Mortgage Lenders Could Soon Take Homes’ Energy Costs into Account,” (Oct. 30, 2011)

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