Green Mortgages
Fannie Mae, FHA and VA all offer “Energy Efficient Mortgages” also called Green Mortgages. An EEM basically measures the cost savings of a home that has energy efficient features and credits the annual energy savings to the borrower’s income so they can afford more home. Borrowers can also finance the cost for energy efficiency renovations into the mortgage. Homeowners will save significantly on their utility bills and will increase the value of their home too.
EEM’s can be made for primary residences (one to four unit), for purchases or refinances on both existing and new construction homes. Borrowers can finance up to $8,000 over and above their loan without the borrower having to pay more of a down payment or having to qualify for this additional amount. The renovation costs can be added in if the renovations and projected energy savings have been drawn up in a home energy rating report.
The Home Energy Rating Report will include an original rating of the house before improvements. It will also include recommendations for energy improvements along with an estimate of cost and annual savings from these upgrades. The report will then project a new rating on the house if the upgrades are installed. Lastly the report should contain an estimated annual energy cost before the rennovations and after. These reports cost about $300 but can wind up saving a homeowner hunderds every year.
Reduced utility expenses enable a homeowner to afford a higher mortgage payment, so they can afford to make the improvements before or even after closing. If the homeowner chooses to make the improvements after closing, the lender will place up to 100% of the cost to renovate in an escrow account. After the improvements have been made – a certification is done and the escrow funds are released to the contractor or the homeowner.
The benefits to the homeowner who is buying or refinancing are absolutely tangible. But green mortgages also positively impact to the environment! The average home that is financed with an Energy Efficient Mortgage reduces greenhouse emissions anywhere from two to four tons per year. Mostly any green feature that adds to the energy efficiency of your home is acceptable by Fannie Mae, FHA and the VA.
Envision Home Mortgage works with lenders who offer EEM’s and we love doing these loans! For help obtaining a Green Mortgage and doing your part for the environment - call Envision Home Mortgage or Apply Now!