financing

It's sunshine, it's free, it's simple enough—right? With all the things to consider, from interpreting the power bill and reviewing solar proposals to comparing paying cash with lower-cost offerings, the process of switching to solar can leave a homeowner buried in paperwork and as confused as ever.

In recent years, a number of innovate companies and business models have emerged to help lower the initial costs and barriers to entry for consumers. Examples include New Resource Bank's solar financing initiative, CitizenRe's solar rental plan (still in pilot phase), and Solar City's group buying program, which also makes it easier to sell power back into the grid in states where this is possible. People can find lots of great information on financial and other aspects of solar at The Solar Guide website.

Another company who provides an innovative financing and service solution for consumers is Sun Run , who’s borrowed a model from commercial markets. We’ve written about them before , and we recently caught up with President and COO Nat Kreamer to get his thoughts on what people should be thinking about as they evaluate solar and solar service providers.

"Californians know that solar power saves money and cuts global warming. Now homeowners are asking us how to go solar in the most financially responsible way, so they can avoid hidden costs or hassles down the road," said Nat. "We're all concerned about the same things: making smart spending decisions that also help protect our environment."

Here's a list of the top seven questions homeowners should answer before they can triumphantly watch the meter spin backwards.

Q: I know solar is great for the environment, but I want to know the economic benefits--How do I compare the long-term cost of solar to what I currently pay my utility?

Ever thought of getting green home insurance? Sound far fetched? Not anymore. Fireman's Fund Insurance Company now offers two types of "Green-Gard" insurance for homes.

For people who already have a green-certified building or a building with certain green features, the insurance will cover the cost of replacement and will even hire a LEED-certified professional to oversee the repairs.

For people who would like to rebuild a home with green features in the event of a loss, the insurance will replace standard systems and materials with green ones such as non-toxic paints and carpeting, Energy-Star rated electrical equipment, energy efficient lighting systems and water efficient interior plumbing.

The insurance even covers the hiring of a commissioning engineer to ensure that all building systems operate properly and are in allignment with one another. To top it off, the company offers reduced rates to building owners who commit to green standards. Who says it doesn't pay to be green?

More information is available on the Fireman's Fund site.

I'm starting to feel sorry for myself :-(... nah, I know I shouldn't, but it's been tough because I am finding that this house and lot appraisal method is so frustrating because we are building green.

Why? You see, in order to get a construction loan for your house, you have to get your houseplans and lot appraised so that the lender can base the loan on the total appraised value. They basically compare your house square footage and the area where you're building and try to find comparables in the neighborhood. The problem is, there aren't too many green built homes to compare to, so they end up comparing your house to the shoddy stick builts and it's simply NOT FAIR!!! I've been talking to appraisers around town and they are saying the same thing... it doesn't matter because we have to go by what is around you. So tell me, how are we going to get comparables around us when they make it so hard for people to build green in the first place? Add the fact that they don't appraise green features/building for a higher value, even though you're saving thousands a year in energy costs, you're not breathing dangerous vapors, as well as being the benevolent and eco-conscious hero of your neighborhood.

And so I ranted and vented and said, but we're building with SIPs, got geothermal and rainwater collection and all these other cool features but to no avail. I am so thinking of going political over this. If anyone has any insight on how I can go about lobbying for making it easier for green built homes, then I'm very open to suggestions and will put on my marching boots.

Here's our situation, and I'll be an open book (as if I haven't already exposed enough):

We need to appraise both our house and lot at about $740K so that we can get 100% financing for our construction costs which came to be approx $590K (80% of the appraised value). This allows us to put no money down because in essence we are using our equity for the 20%.

We are doing this as owner builders with U Build It. And if that's not hard enough, building green can be costly upfront, and so we require more of a loan than if we went conventionally stick built. Then add on the fact that the nation is under a house decline....

We did find ONE appraiser who has specialized in green building in Austin, can you believe that? Here's his info (free PR for him):
Ward Appraisal Services

Also, here's a mortgage company specializing in green building lending:
Green Mountain Mortgage

I guess when people build green, it's their 2nd or 3rd or more house, but we are the pioneer-spirited ones who decide to build our very 1st home properly and green! Woohoo! :-D

The hope is that our land has appreciated enough to cover any large differences. Acreage lots around the Hill Country are getting expensive, so maybe that will be a good thing for us. It's almost becoming a mini California out here. They even built the Hill Country Galleria 8 miles from us and will be developing out this way.

Despite the above, I am trying to stay positive. Really truly, because we deserve this house and want to do it right!!! I am SO HOPING we get the appraisal we want. Wish us luck and as always I'll update with what I find out!

I should do a before and after picture of us when we start the building....

Building green may be substantially cheaper than most of us think.  "Key players in real estate and construction misjudge the costs and benefits of "green" buildings, creating a major barrier to more energy efficiency in the building sector," according to a study by the World Business Council for Sustainable Development.

The report estimates that the error may be as great as 300%: "Respondents to a 1400 person global survey estimated the additional cost of building green at 17 percent above conventional construction, more than triple the true cost difference of about 5 percent."

If you included the increased productivity of human beings who live and work in green buildings, and the lowered healthcare costs, we wonder if the true savings of building green wouldn't reach quadruple digits?

Quietly and with little fanfare, a movement of green financing options has been slowly growing. The idea is simple: a green building has lower operating costs, enabling the homeowner to afford a larger mortgage.

The Energy Efficient Mortgage Program (or EEM) was developed for Fannie Mae by Housing and Urban Development to encourage people to buy greener homes. The maximum mortgage available is only $160,950, making this Federal EEM obsolete for most homebuyers.

Sustainable Capital seeks to fill this void by providing a full line of green mortgage products. But Sustainable Capital has gone well beyond mere energy efficiency in their thinking. By factoring in other green benefits such as improved health and higher worker productivity, they hope to offer even greater incentives to homebuyers.