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Credit Union Financing for Energy Efficiency Upgrades
Since 2009, tens of thousands of households in the US have relied on the solar tax credit to help offset the costs of installing renewable solar energy for their family. The average gross solar panel system cost for a US household stood at $13,142 in 2020. The 26 percent tax credit is a tremendous support for people attempting to lower the overall cost of installing renewable energy and having a more sustainable household.
The solar tax credit, which was initially set at 30 percent, began to drop in 2020. It will decrease to 22 percent in 2021 and will be discontinued in 2022 for residential solar PV systems. To make matters worse, a 30 percent year-one tariff on imported solar cells and modules will only increase residential solar panel systems' costs.
Along with renewable energy systems, homeowners wanting to make other energy-efficient upgrades to their homes are often faced with prohibitive costs. Renovating your home to achieve net-zero status might be a dream for environmentally aware homeowners. But, not everyone has $50,000 in savings to invest in building or renovating a green home. Most green renovations will indeed pay for themselves over time, and real estate professionals can affirm that green and sustainable features certainly increase any home's overall value.
Even though net-zero energy construction is becoming more cost-effective, most homeowners find that without a reliable and fair financing source, purchasing or renovating a home sustainably is beyond their financial means. Local credit unions across the country are possible sources of financing for energy-efficient upgrades that most homeowners are not aware of or have yet to contemplate. Below, we look at why you might consider reaching out to your local credit union if you are having difficulty financing your sustainable and energy-efficient build or renovation.
Energy Efficient Mortgages
The US Department of Energy recommends homeowners looking to purchase an energy-efficient home consider an energy-efficient mortgage (EEM). An EEM, also known as a green mortgage, is a loan product offered by different financing institutions. EEMs allow homeowners to reduce their utility bill costs by enabling them to finance the incorporation of energy-efficient features. An energy-efficient mortgage applies to both new housing purchases and to refinancing renovations or retrofits in existing homes.
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In most cases, an EEM loan is offered as a 15 or 30 year fixed rate mortgage or as an Adjustable Rate Mortgage. These types of loans are offered through FHA-approved lenders. Homeowners are required to put down a 3.5 percent cash investment on the property. The total amount of the mortgage financing you receive is calculated using your home's value and the expected cost of planned energy-efficient improvements.
The savings that stem from the energy efficiency upgrades to your home will allow you to save on utility costs and devote more of your regular income to paying off the mortgage.
Unfortunately, many banks don't offer EEMs or other financing options for energy efficiency home upgrades. Traditional lending portfolios are often focused exclusively on conventional home mortgages, and many banks will be unwilling to consider the potential savings that come with an energy-efficient home. The US Department of Energy estimates that the average homeowner in the United States spends $2,060 on energy bills each year. Energy-efficient upgrades, then, might be able to offset the cost of an EEM significantly.
On the other hand, credit unions are often much more open to innovative loan options. They also are much more likely to offer FHA-approved EEM loans.
Clean Energy Credit Union
This new financial institution is unique because it solely focuses on providing loans for homeowners looking to purchase and implement clean energy products and services. They finance improvements like solar electric systems, electric vehicles, home energy efficiency retrofits, electric-assist bicycles, and net-zero energy homes. This credit union understands that financial barriers associated with traditional loan instruments make it hard for many homeowners to improve their homes' sustainability. They offer loans with quality terms so that your household can invest in the clean energy movement. At Clean Energy Credit Union, you can also open a savings account to help others access clean energy products and services. You can learn more about the specific loan products that they offer here.
Alternatives Credit Union
Based in New York, Alternatives Credit Union also offers a wide range of energy efficiency loans and mortgages. They offer solar and energy-efficiency home equity loans and personal loans, depending on your particular financial situation. You can learn about how to become a member of this credit union here.
Omista Credit Union
Omista Credit Union is a fellow B. Corp. Omista offers green loans for both home renovations and electric vehicle purchases. Green Choice Home Loans are provided at rates of prime +1 percent and for improvements valued between $5,000 and $50,000.
Tobias Roberts
Tobias runs an agroecology farm and a natural building collective in the mountains of El Salvador. He specializes in earthen construction methods and uses permaculture design methods to integrate structures into the sustainability of the landscape.
