colorado energy finance summit-stephen ponce pore
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Lending Opportunities in Colorado Energy Efficiency
Stephen Ponce-Pore – Bank of Colorado
Slide 18
Colorado Retrofit Working Group
Energy Efficiency Finance Summit 2010
Stephen Ponce-Pore, M.S.Energy Programs Manager
Bank of Colorado(970) 231-4024
www.ColoradoEnergyStarMortgage.com
Energy Concerns Are Diverse
Community and Environment• International conflicts, geopolitical unrest, injustice.• Environmental Impacts / Global Climate Change• Homeland security • Cost to import oil- $350,000,000,000.00 a year!
http://www.eia.doe.gov/energyexplained/index.cfm
Personal Finances• Affordability• Opportunity Cost• Return on Investment
Comfort and Health • Too Hot/Cold• Air Quality• Property Value
Those who want to lessen the impact of their
homes, reduce energy use, or improve efficiency
currently face….
Three Financial Challenges 1. Upfront cost – too high
2. Monthly payments – too high
3. Can’t qualify for financing
$ ? $ ? $ ? $ ? $ ? $ ? $ ?
What conventional financing options exist for a customer that needs to borrow for an Energy Efficient Retrofit???
1. Unsecured Funds (Credit Cards)
2. Second Mortgage/HELOC
3. First Mortgage Refinance
Conventional Financing Methods
Credit Card
Second Mortgage
First Mortgage
Amount $10,000.00 $10,000.00 $10,000.00
Rate 14.00 % 7.00 % 4.50 %Max Loan ? 80% LTV 100+Term 72 360 360Payment $206.06 $66.53 $50.67 Utility Bill Start $150.00 $150.00 $150.00 Utility Bill % Savings 30% 30% 30%Utility Bill $ Savings $ 45.00 $ 45.00 $ 45.00 Net Savings $ (161.06) $ (21.53) $ (5.67)
We know…48% of US energy consumption is in buildings US Energy Information Administration
38% is the average amount of equity in an American home. http://pragcap.com/home-equity-stunner
The average interest rate of homes in the U.S. is over 6.00%. www.Efammiemae.com
Mortgage Rates are at 40 year lows.www.Mortgage-x.com/history
…offer a discounted mortgage loan to homeowners that invest in energy efficiency and renewable energy for
their homes.
How can home equity and existing residential mortgage rates be used to offer an energy solution…?
The Colorado
ENERGY STAR® Mortgage
Use the ESM to: Purchase a new ENERGY STAR home Refinance and Retrofit for Energy Efficiency Purchase and Retrofit for Energy Efficiency
Loan Types: Conventional, FHA, VA, Bank, and Jumbo
• Matching funds provided by the Governor’s Energy Office
How ESM works…• The payment on $200,000.00 mortgaged at 5.00% for 30 years, is $1,073.00.
The ESM provides 1% ($2,000.00) to buy down the rate to 4.75%, for a mortgage payment of just $1,043.00. Saving $30.00/ month.
• If the utility bill on the residence was $130.00 per month and the energy improvements reduced the bill by 30% it saves $39.00 per month.
• The combined savings of 69.00 per month at 4.75% for 30 years can finance improvements to the residence of:
$13,294.006.6% increase in purchase capacity!
Without increasing the homeowner’s monthly bills!
Advantages of ESM
Costs Nothing down Nothing a month Nothing in the long run
Availability“If you can afford a mortgage, you can afford an
ENERGY STAR Mortgage.”
So– does the ESM address…
1. Upfront cost – NONE
2. Monthly payments – LOWER
3. Can’t qualify for financing –
If you can qualify for a mortgage you can qualify
for an ESM.
…YES!
Challenges ahead• Continuity of Funding – currently
ARRA/GEO funded
• Promotion and Public Outreach –best kept secret with little marketing budget
• Speed to Market –current interest rates may not last
• Lender Education and Participation -learning curve for lenders
Ideas? Comments? Questions?
Bank of Colorado or Colorado ENERGY STAR Mortgage
Stephen Ponce-Pore(970) 231-4024
Stephen.poncepore@bankofcolorado.comwww.ColoradoEnergyStarMortgage.com
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