Home Equity Loans For Green Improvements

[Sep 25, 2009.]

 

Home Equity Loans for Qualified Green Improvements Offer Interest Rate Incentive

At least one home equity lender is offering three eights percent rate reduction on a trial basis for qualified green home improvements.  Various types of green loans are gaining in popularity.  U.S. Bank experimented with a green auto loan in April that has been very successful.  To find a home equity lender in your area who might be offering this reduced interest rate home equity loan, use this search engine.

How to Use Your Home's Equity for Improvements

When you apply for a home equity line of credit, the mortgage lender will do an appraisal of your home's value.  The value of your home, less any mortgage balances due, equals the amount of equity you may be able to access.  For example:  Your home appraises for $150,000 and you have an $85,000 mortgage balance.  The home's equity is $65,000.  Most home equity lenders will only lend a portion of the equity available.  Normally, the higher the loan to value ratio, the higher the interest rate will be.

Before starting a home improvement project, calculate the total amount of money you will need.  Try to think of every possible contingency.  Add about 20% extra to cover mistakes or anything unexpected during the project. Home improvement projects can be stressful.  Limit your stress by planning well and making sure that your home equity loan is enough to cover the entire cost of the project.

Which Home Improvements Qualify for a Green Tax Credit?

The government is currently offering two different tax credits for improving the energy efficiency of your home.  Before you decide how to improve your house, read through this government website - Energy Star.

The more common home improvements include: windows and doors, insulation, roofs, HVAC, water heaters, and biomass stoves.  If you make a qualified improvement in these areas, you can get 30% of the cost or up to $1,500 until the end of 2010.  This is not for new construction, but for existing homes only.

For more ambitious energy conversion projects, you can get 30% of the cost with no upper limit through 2016.  This would be for existing homes AND new construction.  An energy conversion project might include: geothermal heat pumps, solar panels, solar water heaters, small wind energy systems, or fuel cells.

Finding a Green Lender

Keep in mind, this type of lending is very new and in many cases is being used only in certain areas on a trial basis.  If your area is not yet covered, stay tuned...green is becoming more of a priority. You can make contact with a mortgage lender in your area that can help you get started here.

 

About Author:

Renee Morgan has been a loan officer for over eighteen years. She is also a freelance writer and guest expert for radio and TV.