Ideation

App for mortgage lenders/borrowers to predict utility bills, local costs of EE/solar & effects upon total monthly expenses

One of the biggest hurdles for homeowners in performing deep energy efficiency retrofits or adding solar is a behavioral one, not technical or financial. It’s actually two problems.

 

The first is that people tend to ignore the operational costs of an item, such as the utility bills of their home or fuel costs for their vehicle and focus solely on the sticker price or the monthly mortgage. This leads to non-realistic expectations for what the borrower can afford and why non energy-efficient homes have a 50% higher mortgage default rate and 1/3 higher risk of prepayment.

 

The second has to do with the concept of price anchoring. A person borrowing $500,000 to purchase a home will think that adding $50,000 to reduce their bills is a much better deal than a home owner who is asked to go from $0.00 to $50,000.

 

With $1.3 trillion in annual mortgage origination and $14 trillion overall, software that will help mortgage lenders increase the value of their loans while at the same time reducing their risk of default will transform them into the greatest proponents of building efficiency and solar power that our country has to offer.

 

In addition to the savings from the retrofits and addition of solar, the lower default & prepayment risk should result in a lower interest rate, further reducing the monthly expenses of the borrower.

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Idea No. 343