www.mortgagecalculator.org Open in urlscan Pro
2600:3c03::f03c:91ff:fe28:7e56  Public Scan

Form analysis
0 forms found in the DOM

Text Content

 * Mortgage Calcs
   * 30 yr Fixed
   * 15 vs 30 yr
   * Second Mortgage
   * HELOC
 * Refinance
   * Refi Calculator
   * Refi Advice
   * Refi Costs
   * When to Refi
 * Rates
   * Real APR
   * FHA
   * VA
   * Jumbo
 * ARM
   * Fixed vs ARM
   * Interest Only
   * Interest Only w Extra
   * Balloon
 * Affordability
   * Rent or Buy
   * Income Requirements
   * Mortgage Qualification
 * Save Money
   * Extra Payments
   * Biweekly
   * Paying Points
   * Tax Benefits
 * Advice
   * Mortgage Qualification
   * Types of Mortgages
   * Improving Credit
   * Industry News
 * Financial Calcs
   * Amortization
   * Personal Loans
   * Car
   * CD
 * Widgets
   * Sidebar Calculators
   * Full Page Calc
   * Wordpress
   * Rate Tables

 * MORTGAGE BACKGROUND
   
    * Advice Index
    * Mortgage Glossary
    * What is a Mortgage?
    * Mortgage Application
    * Mortgage Qualification
    * Your Borrowing Limits

 * MORTGAGE TYPES
   
    * Types of Mortgages
    * Mortgage Length
    * Interest Only Mortgage
    * FHA Loans
    * HELOC
    * Second Mortgages
    * Reverse Mortgage

    * CURRENT MORTGAGE RATES
   
    * HOW TO SAVE MONEY
      
       * Rent or Buy Tips
       * Mortgage Tax Benefits
       * Bi Weekly Payments
       * Extra Payment Tips
       * Early Payoff
       * Bad Credit Mortgages
       * Raise Credit Scores
   
    * MORTGAGE REFINANCING
      
       * Refinancing Tips
       * Refinancing Costs
       * Refinancing Benefits
       * Refinancing Risks
   
    * INTERNATIONAL
      
       * Canada Rates
       * Canada Calculators
       * UK Mortgage Rates

   Return to Content

Navigation
Learn How You Can Obtain an Eco-friendly Home Loan


THE HOMEOWNER'S GUIDE TO ENERGY EFFICIENT MORTGAGES

There are many things homeowners can do to save energy in the home.
Unfortunately, many of the most effective ways to create a more eco-friendly
property are too expensive for families to pay out of pocket, but there is a
solution that many home buyers and owners qualify for: an energy efficient
mortgage (EEM). Sometimes called a green mortgage, these home loans provide the
funds needed to pay for major and minor projects and equipment that will make a
property more energy efficient. As a bonus, making these green home improvements
cuts down on the cost of utility bills, which can save you thousands of dollars
over the long term.




WHAT IS AN ENERGY EFFICIENT MORTGAGE?

An energy efficient mortgage is exactly what it sounds like: it's a home loan
that allows home buyers and current homeowners to make their property more
eco-friendly. If you're buying a home, you can add a green mortgage to your
conventional home loan so you can add energy-efficient features to your property
after you close. If you already own a home, you can refinance your mortgage to
include one.

It's important to note that this isn't a second mortgage the way a home equity
loan or home equity line of credit (HELOC) is. Instead, it's attached to your
existing mortgage, so you'll only make one payment to a single lender each
month, and you won't have a second lien on your property.


WHAT ARE THE BENEFITS OF AN ENERGY EFFICIENT MORTGAGE?

Making a home more energy efficient can be expensive, and many families don't
have money set aside for major home improvements. That's where an energy
efficient mortgage comes in: they provide homeowners and buyers the funds needed
to make green home improvements. An added bonus is that once you've upgraded to
these features, you'll reduce the cost of your energy bills, including for your
electricity, water, and gas usage.

In addition to saving you money over the long term, there are many reasons to
consider getting one of these loans to make your home more energy-efficient:

 * You can qualify for a larger traditional mortgage. As part of the loan
   approval process, lenders consider how much you will pay for utilities each
   month, since this affects how much you'll be able to put toward repaying your
   loan. Since your bills will be reduced in an energy-efficient home, you can
   qualify for a larger standard mortgage and buy a bigger house.
 * Your home's temperature will stay more comfortable without relying on your
   air conditioning and heater so heavily.
 * You'll reduce your home's — and your family's! — carbon footprint.




WHAT DOES AN ENERGY EFFICIENT MORTGAGE PAY FOR?

These loans can be used to make a variety of upgrades on your home. Some you may
want to consider include:

 * Attic insulation
 * Ceiling insulation
 * Chimney repair or replacement
 * Double-paned windows
 * Eco-friendly roof installation or repairs
 * Energy Star appliances
 * Energy-efficient cooling and heating systems
 * Energy-efficient HVAC
 * Energy-efficient lighting, including light bulbs and fixtures
 * Geothermal energy units for heating and cooling
 * Solar panels
 * Tankless water heaters
 * Wall insulation
 * WaterSense products
 * Weather stripping and caulking

The types of improvements you should make will depend on your home and your
location. For example, if your roof has a lot of tree cover, solar panels won't
give you a lot of bang for your buck. Similarly, if you live in an area with
warm climate and don't get a lot of use out of your chimney, it doesn't make
sense to put a lot, if any, of your budget toward repairing or replacing it.


WHAT ARE THE DIFFERENT KINDS OF ENERGY EFFICIENT MORTGAGES?

These home loans are part of the federal Energy Efficient Mortgage Program.
There are three different types:

 * Conventional Energy Efficient Mortgage: This loan is backed by Fannie Mae and
   Freddie Mac. It allows you to borrow as much as 15% of a home's appraised
   value to put toward green home renovations.
 * VA Energy Efficient Mortgage: Offered through the US Department of Veterans
   Affairs, qualified active and retired military members can receive up to
   $6,000 to make their new or refinanced home more energy-efficient.
 * FHA Energy Efficient Mortgage: From the US Federal Housing Administration,
   this loan allows you to borrow funds in one of three ways (whichever amount
   is the least):
    * 5% of the home's appraised value
    * 5% of 115% (0.0575%) of the median local sales price of single-family
      homes (for a $500,000 home, this equals $28,750)
    * 5% of 150% (0.075%) of the standard local Freddie Mac limit


WHO IS ELIGIBLE FOR AN ENERGY EFFICIENT MORTGAGE?

In general, anyone who qualifies for a traditional mortgage will also qualify
for a green one. You'll need to have a low debt-to-income (DTI) ratio as well as
a good credit score and credit history, and if you're making a down payment,
you'll need to have cash to pay for it.




HOW DO I GET AN ENERGY EFFICIENT MORTGAGE?

Before you can get one of these loans, you'll first need to have a traditional
mortgage. Once you do, you can apply for this loan at the same kinds of
institutions where you applied for your primary home loan. Lenders that offer
energy efficient mortgages include:

 * Banks
 * Credit unions
 * Mortgage companies
 * Savings and loan companies

Keep in mind that not every lender offers these loans, and some don't offer all
three kinds. It's a good idea to check with your primary loan company first, and
if they don't sell energy efficient mortgages, look at other mortgage companies
to find one that does.

Once you've gotten your primary mortgage, you'll need an official report that
documents the eco-friendly upgrades your home qualifies for. To do this, set up
a Home Energy Rating System (HERS) audit with your energy efficient mortgage
loan officer (MLO). A certified specialist called an Energy Rater will evaluate
your home's energy efficiency and look for opportunities to improve it. They'll
look at details including:

 * Air that leaks in and out of your home
 * Your home's potential for adding solar energy sources
 * Your home's ability to maintain temperature via attic and wall insulation
 * Water-saving features, such as low-flow showerheads and high-efficiency
   toilets

After your appointment, your Energy Rater will write a HERS report that
includes:

 * Your home's current energy-efficient rating
 * Upgrades that can help your home conserve energy
 * Estimates for the costs of these upgrades
 * Rebates you're eligible for at the city, county, and state level for making
   energy-saving home improvements
 * Your home's projected energy-efficient rating should you implement their
   suggested improvements
 * An estimate on the amount of money you'll save by adding energy-saving
   features

Most people pay between $300 and $800 for a home energy audit. However, this can
be rolled into your mortgage. If you're buying a new home, you can also ask the
seller to pay for it as part of their closing costs — it's in the seller's best
interest to close as quickly as possible, so it's worth asking.

After your HERS inspection, you and your mortgage lender can work together on
deciding which improvements should be made to your home and the size of loan you
should take to cover them. Once these decisions are made, you can formalize the
loan.

Once the paperwork is signed and the loan is closed, you'll have up to 180 days
to implement the improvements you agreed to (depending on your lender, you may
only have up to 90 days). Once all of the renovations are done, your lender will
have an inspection done to make sure you completed everything you agreed to in
your energy efficient mortgage contract, and then you'll be paid for their
costs. Keep in mind that while you can DIY these projects, you can't charge for
the labor you do for them — you'll only be reimbursed for what you paid for
professional labor and for equipment.


WHAT ARE THE ADVANTAGES AND DISADVANTAGES OF ENERGY EFFICIENT MORTGAGES?

As with any type of loan, EEMs have a lot of benefits, but they're not the right
solution for everyone. Keep the biggest advantages and disadvantages of green
mortgages in mind as you decide whether to get one of these home loans. Your MLO
and real estate agent are also helpful resources in learning if this is the
right option for you.

✓ Pros ⨯ Cons Allow you to finance costly home renovations with low monthly
payments Not all lenders offer them Green home modifications lower the cost of
utility bills Require a substantial amount of paperwork Can be added to a
conventional mortgage or a refinanced loan Increases the time it takes to close
on a mortgage Interest payments are often tax deductible Interest payments can
make the cost of small projects more expensive than if paid for without an EEM

Save Money While Helping the Environment

For homeowners who want to decrease their new or current home's carbon
footprint, an energy efficient mortgage can be a great solution. These loans
make it easier than ever to pay for major and minor projects that will provide
you with a more comfortable place to live and lower your utility bills — and the
planet will thank you for it!

© 2007 - 2022 www.MortgageCalculator.org | Contact Us