Energy Improvement Loans

I believe many more home owners would make energy improvements for their home if:
     *  The immediate savings in utility costs were sufficient to pay for most of the principal and interest to repay the loan, and secondly,
     *  They could borrow the funds needed with no money down.

A relatively new loan product, called an “Energy Improvement Loan” could finance energy efficiency upgrades and renewable energy installations. Yes, the savings in utility bills would pay for most – maybe all -- of the principal and interest, and the tax credits and applicable utility incentives would go directly to you as the home owner. These loans could be used for a geothermal or new high efficiency heating and air conditioning system; house and duct air sealing, more insulation, new windows, a solar water heater or solar electric generation system that runs your meter backwards! And with a relatively high credit score, a bank may loan you the amount you need with no down payment.

Unlike a car, pickup, boat, or motor home loan, these consumer loans would actually have a positive return on investment (ROI) with immediate positive cash flow. What may be most significant in the future is that the homeowner will lock-in on the increasing tax-free savings for many years to come.

The focused marketing of such loans by banks could be a unique way for them to serve their customers. They would make it possible for their customers to realize utility and energy savings, increased equity or the real estate value of their homes and improve their level of comfort. In addition, these loans would stimulate immediate growth in the local and national economy, and employ a variety of workers.

Also, chances are the best type of people – the ones banks will want to do business with – will be applying for these loans. The related risks for the consumer or the bank will be very low. I believe it would be most effective to market them as “consumer loans” rather than “home equity loans” that require more documentation and an appraisal.

Similar loan and lease programs are now being offered by a few banks, credit unions, utilities and leasing companies in scattered locations around the country.

Please ask your banker or utility company if they offer energy improvement loans. If they do not, ask them why, and then encourage them to begin offering them. I would like to have feedback on what they say, what is being offered, and by whom? I will look forward to reading your comments.