Improve Your Property With An Energy Efficient Mortgage (EEM)
With the ever increasing amount of electricity bills, it is perfectly understandable why more and more property owners are looking for ways on how to reduce their expenses. Unfortunately, not many people understand or are even aware of the existence of an energy-related home loan. Energy Efficient Mortgage, or also known as green mortgage, is the best ways of making your property more comfortable and valuable at a fraction of a cost.
How Energy Efficient Mortgage Works
The EEM or Energy Efficient Mortgage gives you a chance to make your property energy efficient or to finance an energy efficient house.
When you buy an energy-efficient home, the EEM will provide a more flexible underwriting. You will also get the opportunity of borrowing more since the possible energy savings can make the property more affordable than it would have been with no improvements.
For houses which require retrofitting to use lesser energy, you can opt to use Energy Efficient Mortgage to add the value of approved energy improvements to the mortgage with no need to increase your down payment.
The amount of loan will be bigger. But, you can stretch the debt to income rations since the lenders are going to take into account the savings that you will acquire from the suggested upgrades.
Types of Energy Efficient Mortgages
You can now find EIM and EEM programs for loans backed by the government such as the VA and FHA. The enterprises sponsored by the government such as Freddie Mac and Fannie Mae also make provisions for the energy-efficient properties. But, their guidelines and products differ from offerings backed by the government.
Requirements for EEM
In general, you will require a home energy evaluator for conducting the home energy rating, or also called Home Energy Rating System or HERS report. The price of the service ranges from $300 to $450. This rating will estimate the monthly savings on energy as well as the value of the Energy Savings Value or energy efficiency improvements.
What Improvements Can You Expect?
EEM is only usable for approved renovations which can decrease your monthly energy bills. Below are the allowed improvements although some other projects can be qualified.
– Solar cooling and heating systems
– Solar water heaters
– Weather stripping and caulking
– Clock thermostats
– Specific furnace efficiency modifications
– Water heater insulation
– Additional or new ceiling, wall, floor, and attic insulation
– Heat pumps
– Storm windows or doors, which include thermal doors and windows