Energy Efficient Mortgage and Energy Improvement Mortgage

What is an Energy Efficient Mortgage?

An Energy Efficient Mortgage (EEM) is an affordable loan that values a home’s energy efficiency improvements into the mortgage.

EEMs are loans that provide special underwriting considerations so you can purchase or refinance homes that are energy efficient.

These mortgages cover energy saving equipment like solar heating systems. EEMs, let’s you qualify for a larger loan than you would otherwise qualify by including the extra cost of making energy efficiency improvements or purchasing an already energy-efficient home.

Some lenders reduce loan fees or interest rates for homes that are certified as energy-efficient based upon a Home Energy Rating.

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Types of Energy Efficient Mortgages

Energy Improvement Mortgage is used to purchase an existing home or to finance energy improvements. How does an energy efficient home saves money?

Energy Efficient & Energy Improvement mortgages benefits:

• Unless you pay cash for a home, you make a mortgage payment and utility bill based on monthly energy usage.

• Together, these expenses are typically the largest monthly operating costs for your home. A home that qualifies for EEMs results in lower operating costs (mortgage + utility bills) than comparable homes.

• It allows you to include the cost of energy improvements, generally up to 15% of the value of the home, can be financed and paid for over the life of the mortgage.

• The increased home’s value is adjusted based upon the value of the energy efficiency improvements.

• The estimated value in energy savings from the energy efficiency improvements are added to your income to allow you to qualify for a larger mortgage.

• Most energy efficient homes are more durable than a standard home and therefore, benefit from lower maintenance costs.

How Does a Home Qualify ?

• Effective insulation
• High performance windows
• Tight construction and ducts
• More efficient heating and cooling equipment – solar heating technology qualifies.
• More efficient water heater – solar hot water qualifies.
• Qualified lighting, appliances, and programmable thermostats.
• Third-party inspection and testing.
• The energy rater not only evaluated the homes current energy efficiency. However, they make recommendations for cost effective energy improvements.

At the top of the list is solar heating and other energy conservation improvements identified in the Home Energy Rating. This rating assures you that your investment is solar heating will reward you financially and the lender has loan security.

To learn more go to Home Energy Rating.