What are Energy Efficient Mortgages?
Energy efficient mortgages, also known as EEMs, are designed to encourage people to purchase energy efficient homes and to remodel their existing homes. There are a number of different types of energy efficient mortgages, some of which are supported by government agencies which are designed to promote home ownership among low income individuals and veterans. When buying or remodeling a house, an energy efficient mortgage is definitely something to think about, especially if you are thinking of making energy improvements anyway. The logic behind an energy efficient mortgage is that an energy efficient home is cheaper to run and maintain than one which is not efficient, but modifying a home to be more efficient can be expensive. These mortgages make additional funds available to homeowners and purchasers to help them install energy efficiency tools like better insulation, low energy appliances, solar panels, and so forth. By helping people make their homes more efficient, these mortgages
Energy efficient mortgages are a type of mortgage that credits a home’s energy efficiency in the financing of its purchase. Two illustrations of an energy mortgage include: • Allowing the borrower a greater debt to income ratio; and • Giving the buyer the ability to acquire a higher quality home. For homes where the energy efficiency can be improved, an energy mortgage allows the dollar savings from lower utility bills to finance energy improvements. Shocking Origins Energy efficient mortgages have their origins after the second oil shock. In the early 1980s, the federal government sought ways to increase energy efficiency opportunities. The four major national lenders the Veterans Administration, Housing and Urban Development, Freddie Mac and Fannie Mae began programs that focused on solar energy and other home improvements that were made before the close of escrow. Demand for the mortgages in the 1980s languished because of lack of awareness, improvements had to be made before fundin
Energy efficient mortgages, also known as EEMs, can make it easier for you to qualify for a loan to purchase a home that is more energy efficient. Home owners with lower utility bills have more money in their pocket each month and can afford to allocate a larger portion of their income to housing expenses. For example, rather than buying a house with a monthly mortgage payment of $1500 and electricity and natural gas bills of $375 a month, with an energy efficient mortgage you can afford a $1650 month mortgage payment with $90 utility bills and be both better off and more comfortable. Generally you have two options when looking at energy efficient mortgages. One option is to increase your buying power. Because you will be saving money on your utility bills each month, lenders can stretch your debt-to-income qualifying ratios allowing you to afford a more expensive and more energy efficient home. What if the home you want to purchase isn’t already energy efficient? You can take advantag
Whether buying, selling, refinancing, or even remodeling a home, you can potentially save money by using an Energy Efficient Mortgage, also known as an EEM. An EEM presents the borrower with additional benefits when the home is deemed energy efficient. If the home you are considering is not energy efficient then energy-saving improvements can be made to qualify for an EEM. These mortgages can be completed on FHA, VA, and conventional loans, and also can be applied to Portfolio and Jumbo Loans.
A type of home mortgage that takes into account the energy savings of a home that has cost-effective energy saving improvements that will reduce energy costs thereby allowing the homeowner to more income to the mortgage payment. A borrower can qualify for a larger loan amount than otherwise would be possible. U.S.
