How to Finance Energy Upgrades Green Building for Cool Cities Rick Williams CGBP, CMPS

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Suzanna Julianna Palmer
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1 How to Finance Energy Upgrades Green Building for Cool Cities Rick Williams CGBP, CMPS October 9, 2010

2 Energy Upgrade California Financial Clearinghouse Web Portal One-stop shopping by zip code for local programs Preapproval and standardized underwriting Rate buy down for unsecured loans Homeowner loan choice and comparison Universal application for rebates and loans Community Development Financial Instruments On the horizon and needed Full implementation 2 nd quarter 2011

loans Homeowner loan choice and comparison Universal application for rebates and loans

3 But What about Now? PG&E rebate $4,000 Energy Efficiency Tax Credit* $1,500 Cash for Appliances Rebates up to $1,000 Total $6,500 *Tax Credit expires 12/31/10 30 year fixed rates below 4.0%

4 Job Estimate & Financing Energy upgrade $15,000 Utility rebate $4,000 EE Tax Credit $1,500 expires 12/31/10 Deposit $1,000 Financed Amount $10,000

5 Financing Considerations How much to finance? Can you document sufficient income? Credit Score > 660? Other cash needs or credit consolidation? Current rate on mortgage?

6 Financing Options Unsecured Loans up to $25,000 Conventional Mortgage Refinance FHA Title One Home Improvement Loans FHA 203K Rehabilitation Loans Energy Efficient Mortgages, EEMs Line of Credit, HELOC

Improvement Loans FHA 203K Rehabilitation Loans

7 Unsecured Loans Up to $25,000 No Income documentation No appraisal Shorter loan term & higher monthly payments Contractors manage the application Programs buy rates down

8 Conventional Mortgages Reduce both mortgage and energy costs with today s low rates $400 K 30 year fixed 5.5% $2,271 $414 K ($10K plus costs) 4.25% $2,036 Monthly savings $ 234 Full income documentation & 20% equity

9 FHA Title One Home Improvement Secured loans to $25,000 Full documentation required BUT no appraisal Term between 5 & 20 years Interest 6.95% to 11.95% Fast, 14 days to fund from complete application

10 FHA 203K Rehabilitation Loan Purchase foreclosure for Green rehab OR Refinance underwater properties and rehab Provide $35K for improvements & include in 30 year first mortgage Combine energy upgrade with bath & kitchen remodel Covers roofs, insulation, windows, flooring, even refrigerator Only 3.5% equity needed 60 days to fund

first mortgage Combine energy upgrade with bath & kitchen remodel Covers roofs,

11 Energy Efficient Mortgages Up to 5% of appraised value for cost effective energy solutions ONLY Added to new first mortgage Requires HERS test (energy audit) Combine with 203K for serious rehab For ex.: on a $400,000 appraised home 5% EEM = $20, K = $35,000 Total: $55,000 for rehab - all in 30-year fixed loan

audit) Combine with 203K for serious rehab For ex.

12 Energy Efficiency Financing Start Documented Income? Yes Conventional Refi FHA Loan Title One Monthly cost per $10, % FHA Title 8% 30 year fixed@ 4.25% 203K 4.75% No Current Mortgage rate 5.25% If rate lower Title One 15 8% $102 Unsecured 12 year $150 * PACE 15 year $90 If interest rate is greater Loan to Value % Unsecured Rick Williams (831) DRE # NMLS # Use these estimated rates & monthly costs with the total financed amount after rebates & deposit LTV < 80% 30 year conv. $49 LTV < 96.5% 203K rehab $59 LTV < 96.5% EEM $59

25% If rate lower Title One 15 yr @ 8% $102 Unsecured 12 year $150 * PACE 15 year $90 If interest rate is greater Loan to Value % Unsecured Rick

13 Audit Credit from Realtors Offered by California Association of Realtors Effective October 15, 2010 $250 credit towards cost of HERS audit at time of sale Energy Efficiency Mortgage & 203K Rehab

14 $6 Grand on the Table! Tax Credit expires 12/31/10 30-year fixed rates below 4.0% now Reduce greenhouse gas and save $ Rick@ecoenergyloan.com

15 Start Energy Efficiency Financing Flowchart Documented Income? Yes Go to next page No Unsecured 10 year $150 Document income? 1. Can you document 2 years of consistent income with W2 and current paychecks? 2. If you are self employed, can you show two years of income with your tax returns? 3. Does your current mortgage, insurance and taxes total more than 40% of your gross income? If you cannot document your income sufficiently there are good unsecured loans are available with stated income and good credit scores. You can arrange them with your contractor. Figures represent monthly payments for each $10,000 financed. Webinar by

3. Does your current mortgage, insurance and taxes total more than 40% of your gross income?

16 With documented income Today s mortgage s require documented income, & at least two months mortgage, taxes & insurance in savings Conventional Refi FHA Loan Title One Consider a refinance If your interest rate is greater than 5.25% Current Mortgage rate 5.25% If you have refinanced within 120 days or your rate is less, go to the next page for a second mortgage An appraisal is required. Divide your total mortgage amount by your anticipated value for an estimated LTV % Loan to Value % These are 30 year mortgage payments. Go forward for specs LTV < 80% 30 year conv. $51 LTV <96.5% 203K rehab $59 LTV < 96.5% EEM $59 There are also 20, 15 &10 year rates & variable rates

25% If you have refinanced within 120 days or your rate is less, go to the next page for a second mortgage An appraisal is required.

17 Second Mortgages If rate lower Title One 15 8% $102 Unsecured SoCal Gas $145 HELOC Variable % $101 HELOCs or Home Equity Line of Credit require < 80% LTV and full documentation. The rate is variable and based upon the Prime Rate. Your bank or mortgage Lender can arrange your HELOC. A second mortgage can provide fast home improvement financing. The first three options are available through a contractor. Limited documentation is required. Often, no appraisal is required. The monthly payments are estimates for each $10,000 financed. Length of payment term may vary with lender.

A second mortgage can provide fast home improvement financing. The first three options are available through a contractor.

Welcome to the world of Renovation loans

Welcome to the world of Renovation loans What is a 203K loan? How can a 203K loan be used? Advantages of 203K loans The process of obtaining a 203K loan Why we are the experts A 203K is FHA s Rehabilitation