Extreme heat waves this summer have brought record-breaking temperatures to Seattle, Portland and other areas in the Pacific Northwest; earlier in the year, three sequential winter storms in Texas resulted in widespread power outages that crippled the state. These and other examples of severe weather over the past few years continue to underscore the importance of energy options for homeowners that are affordable, sustainable and reliable.

But while technology like solar panels, geothermal heat pumps and evaporative coolers can be sound investments depending on the region and climate, these energy-saving upgrades can be costly.

Lenders and other mortgage professionals can help with mortgage solutions that allow homebuyers to incorporate energy-efficient features into the homes they’re buying, or homeowners refinance to make improvements on their current homes, reducing overall utility consumption and cost.

Above-Average Temperatures Forecast Nationwide

Similar to last year, The Weather Channel forecasts that this will continue to be an unusually hot summer across the lower 48 states. Arriving on the heels of The Western North America heat wave this past June and July was another intense bout of exceptionally high temperatures in southeast California, southern Nevada, northwest Arizona and the Great Basin. These phenomena comprise a measurable trend. According to data from the EPA, the frequency of heat waves in the U.S. has increased from an average of two per year in the 1960s to six per year in the 2010s; the season for heat waves is also 47 days longer now than it was in the 1960s.

Residents Seeking Smart, Economical Ways to Save on Energy Use

This ongoing pattern of extreme weather events is prompting more homeowners to consider efficient, reliable home heating and cooling systems. These can range from installing new windows and insulating an attic to swapping out inefficient HVAC units for newer, more technologically advanced models with smart thermostats, indoor air quality controls and variable speed compressors. However, it’s often difficult for borrowers to understand and reconcile the upfront costs of energy-efficient upgrades with the long-term savings from lower maintenance costs and utility bills. 

Lenders can encourage consumers to obtain an energy audit to assess current energy consumption and identify energy efficiency improvements that they can conduct to make their home more efficient. 

Lenders can also help borrowers by educating them on the benefits of these improvements. A recent study indicates that homes that demonstrate greater energy efficiency as validated via an energy audit can command higher sales prices—on average approximately 3% higher than homes that are not rated for efficiency through an audit. 

Lenders can also provide tools to help finance relevant upgrades and installations through energy efficiency or “green” mortgages. Such loans can:

  • Finance energy- and water-efficiency improvements in an existing home. 
  • Pay off higher-interest debt incurred from previously installed energy- and/or water-efficiency improvements.
  • Help with the purchase of a home and finance future improvements.
  • Combine energy-efficiency home improvements with Freddie Mac’s low down payment mortgage products to purchase and settle on a house before improvements are complete.

As extreme weather patterns continue to impact people and their homes, lenders can leverage energy-efficiency mortgages to increase loan originations and help families use resources more efficiently and build greater equity by improving their homes.