Energy Efficient Mortgage Guide for Homeowners

by Allen Quay

in Home Improvement

An energy efficient mortgage (EEM) are sometimes called green mortgages. This type of lending product allows borrowers to reduce their utility bill costs. Energy efficient features may be financed as a part of the new house purchase or as a part of a refinancing of an existing mortgage. Borrowers who qualify for an EEM need to have their house inspected by an energy rater who uses certain qualification standards that have been determined by the U.S. department of energy. This energy audit report may be used to apply for an energy efficient mortgage and the savings that may be expected with this type of mortgage.

 

First Introduction of EEM

The EEM program was first introduced in 1980, and this type of program is currently sponsored by all mortgage programs that are insured by the U.S. federal government. The popularity of this type of mortgage product has been limited. There are several types of mortgage loans and the executives of Federation of American Scientists or FAS say that less than 1 percent of all home loans in the US are EEMs. Energy Consumption in the U.S.

While energy consumption, compared to growth in the U.S. hasn’t changed much in the past 30 years, the energy produced from the homes in the U.S. emit about 20 percent of the greenhouse gases found in the environment.

According to the U.S. Energy Information Administration – the average annual consumption of energy per family in the U.S. is 11,496 kWh.

One reason that energy consumption hasn’t increased too much despite population growth is because companies are making more energy efficient products. Computers, lamps, washers, dryers and so on can all be operated using minimal energy consumption.

This, however, doesn’t mean that reform isn’t in order. Natural resources are used to create the energy that is used throughout the world. If more people don’t make changes, then there could potentially be an energy crisis in the near future, despite the many energy efficient product on the market today.

 

Who Qualifies for an EEM?

[pullquote]Anyone buying a home that intends to apply eligible upgrades will be able to qualify for an energy efficient mortgage. [/pullquote]Anyone buying a home that intends to apply eligible upgrades will be able to qualify for an energy efficient mortgage. Essentially, this means anyone who qualifies for a mortgage. There are criteria, however, for the type of improvements allowed. The cost of the improvement made to the home must be recouped in energy savings for the life of the product.

As an example, if your plan on re-insulating your home, a high quality insulation is guaranteed to last for 50 years. This means that you will have to divide the cost of the product by the estimated annual savings for 50 years. This is the amount of money that you can get approval for from the green mortgage.

 

Who Provides EEMs?

You will find that an energy efficient mortgage is available from a variety of lenders. An EEM is insured by the government so typically banks that sell their loans to government entities like Fannie Mae and Freddy Mac offer this type of mortgage. In addition, VA loans and FHA loans, which are both part of government programs, qualify for EEMs.

If you already have a lender in mind for your mortgage and you want to find out quickly if they offer EEMs, then you can visit the U.S. Department of Housing and Urban Development website.

ENERGY Star, a joint program of of the U.S. Environmental Protection Agency and the U.S. Department of Energy, also has created an interactive map that provides you qualified lenders in your area that provide energy efficient mortgages. Complete with contact number, location and other details.

 

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