Mortgage company offers energy efficient loans

LANSING - A local mortgage company has discovered a tool that can help homeowners battle rising utility costs.

Priority Mortgage Corp's Lansing branch is the first lender in the state to bring energy-efficient mortgage lending to Michigan, according to Indigo loan officer Joel Wiese.

"The average home that goes through an energy-efficient mortgage will generally save 30 to 50 percent off their utilities a year," Wiese said. "And it's huge."

Wiese highlighted three reasons consumers should consider energy efficient mortgages: They save on utility bills, protect the environment and help boost homes' values.

The loans work like this: New home buyers or existing refinance consumers apply for an energy-efficient loan. Once the application is approved, an energy audit is done on the home.

The home gets an energy rating on a scale of zero to 100 percent as well as a list of areas in which the home's energy efficiency could improve.

The homeowner is able to pick and choose from a "menu" of improvements in areas such as heating, cooling, hot water, lights and appliances, and photovoltaics (solar panels, for example). After picking the improvements, the homeowner closes on the loan and the work begins after closing.

The money for the improvements is held in escrow either by the title company or the lender. The work must be completed within 90 days after the close, then the money to pay the subcontractors is distributed by the general contractor.

Wiese warns that this program is not for do-it-yourselfers because lenders want a guarantee that costs are not going to spiral out of control.

If a homeowner has a preferred vendor contractor or vendor for Energy Star appliances, for example, the lender would honor that preference. As long as the purchase or improvement contributes to the efficiency of the home, it's covered under the terms of the loan.

Wiese said the amount of equity in the home doesn't matter.

"The other neat thing is that even if you have a person with no equity in their home ... it really doesn't matter," he said. "If the home is worth $120,000, the homeowner can spend up to $18,000 on improvements regardless of equity."

Because the money is used to make energy efficient improvements, the $18,000 spent on improvements is added to the $120,000 value, making the market value of the home more than $130,000.

"You've raised the value of the home as well," Wiese said.

The energy efficient mortgage works on every conventional and governmental financing program and meets all federal lending requirements.

"With the ability to save 30 percent to 50 percent on utilities annually, it's just the right thing to do," Wiese said. "And it doesn't cost the borrower any more to do so."

Indigo Financial is located at 2216 E. Michigan Ave., in Lansing and can be reached by calling (517) 483-5121.