Answering Common Borrower Questions: “What is a Green Mortgage Loan?”

How to help your clients help the environment.

How many of your recent clients have asked about a Green Mortgage loan? Have you noticed any uptick, by chance?

We ask because environmentalism is definitely on the rise —just last year, more than two-thirds (67%) of Americans felt that the U.S. should prioritize developing renewable energy sources (think wind and solar) over expanding the production of oil, coal, and natural gas. Two-thirds (66%) of Americans now also believe that the Federal Government should incentivize pro-environmental choices.

So, what does all this mean for mortgage professionals? Well, that increased consumer interest in Green Mortgage loans may not be far behind!

This new energy provides the perfect opportunity to ease anxieties, promote borrower education, and overall ensure your clients receive the loans they want and need.

 So, let’s dive into some of the most common borrower questions surrounding Green Mortgage loans and their comprehensive answers:

“What is a Green Mortgage Loan?”

Start with a clear, simple definition. Here’s a sample script you might use:

 “A Green Mortgage loan is a loan used for eco-friendly home upgrades or to purchase a particularly energy-efficient home. Its purpose is to incentivize eco-friendly, or “green,” consumer behavior. You might also hear mortgage professionals refer to a Green Mortgage loan as an Energy Efficient Mortgage or an EEM.”

Clarify that Green Mortgage loans may typically be rolled into a primary home loan as opposed to stand-alone mortgage options. You might also want to discuss Green Mortgage loan facilitators at this point, like the FHA, VA, and various banking institutions.

Consider writing all important terms down or providing a Green Mortgage loan handout, so curious clients can do some research on their own time if they choose.

“What are the Potential Pros and Cons of a Green Mortgage Loan?”

While Green Mortgage loans will certainly appeal to a few subsets of borrowers, they definitely may not be for everybody. Make a point to go through the potential pros and cons with any curious borrowers.

Feel free to copy and paste the below into a follow-up email or text:

Potential Pros of a Green Mortgage Loan

• Potential savings. An  avenue to potentially improve energy efficiency, lower utility costs, and increase home value.
• Financial benefits. Green Mortgage loans are typically rolled into a primary home loan, meaning no additional down payment. With some programs, you can also potentially refinance a Green Mortgage loan at a lower interest rate.
• Better energy efficiency. Green Mortgage loans don’t just help you – they can help cut down on energy expenditures and fight climate change overall. Now that’s a win for all of us!

Potential Cons of a Green Mortgage Loan

• Fairly strict implementation requirements. Green Mortgage loan recipients may need to work with specific providers or installers.
• Typically, there  can be some hurdles to jump through. Borrowers interested in a Green Mortgage loan might need to do more due diligence than they would with another loan type.
• Fairly new mortgage product. In the grand scheme of things, Green Mortgage loans haven’t been around all that long. Some more robust research surrounding the long-term costs and benefits wouldn’t hurt.

“Is a Green Mortgage Loan Right for Me?”

Now that you’ve explained the definitions, pros, cons, and process, your “greener” clients might be ready to make a move.

Of course, the answer to this particular question is going to depend entirely on the client, their needs, and their preferences. Walk through their options together, running a cost-benefit analysis if needed. Remember to check for understanding every so often, and always pause for questions at the end of a call or meeting.

Finally, remember that your clients are after your professional guidance. If you feel they need a particular piece of advice, don’t be afraid to give it. Borrowers will always respect an honest, open mortgage professional.

“How Do I Get a Green Mortgage Loan?”

If it turns out that a Green Mortgage loan works for this particular client, that’s great! They’re already talking to you, so that’s one step in the right direction.

Consider having a checklist of required paperwork at the ready, working up a lender comparison, working with the client to arrange a home energy audit, and making clear plans for your next touch base.

Hopefully, they’ll be living a little greener in no time!

Final Thoughts: Green Mortgage Loans

So, there you have it: Some of the most common borrower questions relating to Green Mortgage loans, their comprehensive answers, and even a few opportunities for you to go above and beyond as a mortgage professional.

Whether your borrower is making a few eco-friendly updates or investing in a whole “green” home, a solid understanding of Green Mortgage loans may be critical. Your clients, and the environment, are sure to thank you! 

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