If you are in the market for a new home, you may want to look into the energy efficiency mortgage program, also known as EEM. This type of home loan program helps borrowers qualify for loans to purchase homes with specific energy-efficiency improvements. A lender can offer conventional, FHA or VA energy efficiency mortgages.
Any buyer that qualifies for a mortgage can also qualify for the EEM. The Home Energy Rating System, commonly referred to as HERS is used to determine what benefits the homeowner will receive. The purpose of EEM is to give borrowers additional benefits on top of their usual mortgage deal. EEMs can be done on most homes with conventional (Fannie Mae or Freddie Mac), portfolio or jumbo loans (availability not limited to location or price of the home).
The lender determines the benefits received by the borrower by utilizing an HERS report which is prepared by a trained energy rater. Appliance efficiencies, insullation, window types, utility rates and local climates are factors used to evaluate and rate individual homes and calculate energy costs. It’s best to have the HERS Rating done as early in the loan process as possible. While other aspects of the loan are being processed, the HERS report can be completed so there are no delays in closing. The HERS report will include the following:
Rating scores are between 1 and 100 as recommended by the U.S. Department of Energy. Anything higher is considered greater efficiency. Upgrades are cost-effective if they save more money through energy savings than the cost to install them. The cost of an HERS report is anywhere between $100 - $300 and can be paid by the buyer, seller, lender, real estate agent or financed as part of the mortgage.
A lender can stretch the debt-to-income qualifying ratios to allow for a larger loan for a house that’s considered energy efficient. A larger percentage of the borrower’s monthly income can be applied towards the monthly mortgage payment rather than paying out in higher energy costs. This gives the buyer more borrowering power based upon the same income.
Here are some sites to check out for more information on energy efficiency mortgages:
Every house is unique, so the benefits derived from an EEM will be different from one to another. Your lender will be the best source for finding out what your EEM benefits will be.
If you’re buying a new home and need additional information on mortgages, visit New Homes Central Lending - the experts on new home mortgages.
[tag]energy efficiency mortgages, home financing, mortgages, new home, new home mortgages, home loans[/tag]
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The Author: admin Website: http://www.newhomes.com About: Frank has 11 years of Internet marketing experience within the real estate industry. As Director of Internet Marketing at American Home Guides, Frank was responsible for the creation and implementation of all search engine marketing. He developed a network of over 400 web sites that brought in over 2.5 million visitors a month.
This entry was posted by admin, on Friday, November 2nd, 2007 at 7:41 am and is filed under Mortgage/Home Financing. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
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Comment by Sandra Tuell
What a great mortgage product! Buyers can qualify for a bit larger loan on a home that will save them money in the long run by reducing the energy costs. Now that makes sense. It’s better for the homeowner AND the environment. Thanks for the informative article on EEMs, Victoria.
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