Justifying Going Green – 2nd of 3 Posts

This series of three posts are excerpts from my book, Holistically Green Homes, Eighteen Principles for Designing, Building, and Retrofitting Your Energy Efficient Home.

I’m often asked, “How much will it cost to build a new home?” Well, that’s like asking how much a cart of groceries will cost. If you fill your cart with baloney, hamburger, bread, and potatoes, it will cost a lot less than if you fill it with lobster tail, exotic fruits, and gourmet coffees. Cost depends on contents

If you have never lived in a truly energy efficient, passive solar home, questioning whether investing the additional money up front for efficiency will be worth it is understandable. So what are the facts? Let’s look at how much you pay every month to live in your home. If you’re like many of us, you have a mortgage that requires monthly payments on principal and interest. Some mortgage companies also require a monthly payment (often escrowed) for insurance and tax payment. Then you have monthly utility or energy bills. I refer to that total as PITIE: Principle, Interest, Taxes, Insurance, and Energy.

Look at these examples: The monthly payment (PITI) for a standard home is $1,298. The PITI payment for an energy efficient home is $1,450 – yes, the energy efficient home is more. Now add in your energy costs (E). The standard home averages $250 a month, and the energy efficient home averages $75. Add your costs together to get your total payments (PITIE), and voila! The energy efficient home costs $23.26 less per month than a standard home of the same size.

Your overall savings are $279.12 per year, and they’re locked in for as long as the house stands. Your energy savings actually allow you to pay more up front for energy saving features, and still have equal or lower monthly bills. In effect, the energy savings offset the higher mortgage payment. As utility and energy prices increase, your savings increase. Plus, you can currently deduct your mortgage interest off your federal taxes to reduce your tax liability. Further, the now and future energy savings are never taxed as income – in contrast to an investment or interest on a cash deposit. What a bonus!

So what’s the rub? Why isn’t everyone taking advantage of these savings? Unfortunately, most bankers and mortgage underwriters consider only the principal, interest, taxes, and insurance (PITI) in their mortgage calculations. You can avoid that trap by completing the “Uniform Residential Appraisal Report 1004” (www.efanniemae.com/sf/formsdocs/forms/pdf/sellingtrans/1004.pdf), and shopping for a lender that recognizes the value and accepts the information on this form. To best complete the above form, a pre-construction home energy rating (HERS Index) based on the blueprints should be completed by a certified home energy auditor, and the appraiser should have education and knowledge related to recognizing and documenting energy efficiency in housing.

Simply put, when you build an energy efficient home, you pay more to the bank, less to the utility company, and less in taxes. Plus, you’ve protected yourself against future energy cost increases—a huge savings over time.

And what happens when you sell your home? It is worth more than others because buyers usually ask what the utility bills are before they decide which house to buy. The efficiency of the house may again be documented by a HERS Index. It is all about confirming what is really efficient and green!