With a glut of housing inventory on the market, housing prices remain depressed and many people are choosing to stay in their homes. However, historically low interest rates make this a great time for you to buy or to refinance, and Energy Efficient Mortgages (EEM’s) offer an opportunity to pay for energy efficient upgrades to your home at the same time.
By making your home more energy-efficient – with high-efficiency heating systems , insulation upgrades, energy efficient windows, etc – a home financed with an EEM can make it possible to cut your utility expenses and have a mortgage with a lower monthly payment, while improving your comfort and your home’s value!
An EEM credits a home’s energy efficiency in the mortgage itself. Energy Efficient Mortgages aren’t second mortgages. Though they are created separately from your primary mortgage, they are ultimately rolled into your primary mortgage—so you only make only one payment per month. EEMs give you the opportunity to:
- Finance cost-effective, energy-saving measures
- Qualify for a larger loan amount
- And have a more comfortable and energy-efficient home
EEM’s can finance as much as 15% of the value of the existing home to improve energy efficiency depending on what type of EEM you get. They are available through several lenders, including Fannie Mae, the Federal Housing Administration, and the Department of Veteran Affairs. Conventional EEM’s can also be offered by lenders who sell their loans to Fannie Mae and Freddie Mac. Each program manages EEM’s differently, so check with your lender for details.
Finally, to get an EEM you will need to have a home energy rater conduct a home energy audit. This rating either verifies for the lender that the home is already energy-efficient or recommends the improvements your home needs. And, though you may have had your eye on upgrades that you think you need, you do have to follow the official recommendations in the report you receive. You will work with your lender to find a licensed Energy Rater to help you complete this process.
For more information on EEM’s visit the Energy Star website or contact your mortgage lender.
