Is Green Another Type of Mortgage Not Readily Used?
Green Mortgages may seem like a new novel idea but they’ve been around for decades. A green mortgage simply is a type of mortgage that provides you a money-saving discount or a bigger loan than normally permitted as a reward for making energy-efficient improvements or for buying a home that meets particular energy-efficiency standards. It also makes it easier for you to qualify for a loan.
Green mortgages hinge on the principle that a more energy-efficient home means lower utility bills and, as a result, greater income, qualifying a prospective homeowner to buy a more expensive house. Officially, the mortgages often are called Energy Efficient Mortgages (EEMs) or Energy Improvement Mortgages (EIMs).
A green mortgage allows you to roll in the costs of making specific energy saving improvements to the home you are building or purchasing. This will, of course, increase your monthly mortgage payment but since because these improvements will drastically lower your energy, gas and water consumption, your monthly utilities will decrease even more so than your mortgage - saving you money every month.
Individual monthly savings will differ depending on the degree of the property's energy efficiency. There are instances where the home energy efficiency improvements have led to monthly savings of $400 and greater.
If you saved $100 per month in energy costs for an annual savings of $1200, your home's value would increase $24k.With the increase over the past 10 years in energy costs, this amount is probably higher.
There are several options for Energy Efficient Mortgages or EEM that one might qualify for
• Fannie Mae Energy Efficient Mortgage (EEM) Pilot
• Federal Housing Authority (FHA) Energy Mortgage Program
• Veterans Administration Energy Mortgage Program
• Freddie Mac Support for Energy Conservation
• Energy Star Mortgages
The process of getting an energy efficient mortgage is exactly the same as a conventional mortgage with the exception of adding in the extra step of having the energy audit performed.
1. First you select your property, received an approved offer, enter into contract, complete home inspection and property appraisal.
2. Schedule the home energy audit to be completed as soon as possible after home inspection and appraisal.
3. Once these reports come back, the loan officer with finish the remaining paperwork which includes the application for the EEM and includes the energy audit report. Your lender then completes a two page Energy Addendum form to include with the rest of the loan paperwork.
While commercial builders have taken advantage of this program more than homeowners the opportunity is there to reduce your home energy outlay by from 30 to 50 percent, guaranteed.
