EEM Home Owner Guide
Energy Efficient Mortgage Home Owner Guide
THE ENERGY EFFICIENT MORTGAGE means comfort and savings. When you are buying, selling, refinancing, or remodeling your home, you can increase your comfort and actually save money by using the Energy Efficient Mortgage (EEM). It is easy to use, federally recognized, and can be applied to most home mortgages. EEMs provide the borrower with special benefits when purchasing a home that is energy efficient, or can be made efficient through the installation of energy-saving improvements.
Home owners with lower utility bills have more money in their pocket each month. They can afford to allocate a larger portion of their income to housing expenses. If you have more cash, why not buy a better, more comfortable home? There are two options with the Energy Efficient Mortgage.
- 2 Sides of the EEM Coin
- Who Benefits from the EEM?
- Home Energy Rating Systems
- Keep in Mind
Finance Energy Improvements!
- Cost-effective energy-saving measures may be financed as part of the mortgage!
- Make an older, less efficient home more comfortable and affordable!
Increase Your Buying Power!
- Stretch debt-to-income qualifying ratios on loans for energy-efficient homes!
- Qualify for a larger loan on a better home!
- Get a more comfortable home NOW.
- Save money every month after the improvements are completed.
- Increase the potential resale value of your home.
- Sell your home more quickly.
- Make your house affordable to more people.
- Attract attention in a competitive market.
- Get all the EEM benefits without moving.
- Make improvements which will actually save you money.
- Increase the potential resale value of your home.
Pay for energy improvements easily, through your mortgage. I can increase your loan to cover energy improvement costs. Monthly mortgage payments may increase slightly, but you could actually save money because your energy bills will be lower!
A HERS report is similar to a miles-per-gallon rating on a car. HERS are programs which provide an evaluation of an individual home’s energy-efficiency. A HERS report is prepared by a trained Energy Rater. Factors such as insulation, appliance efficiencies, window types, local climate, and utility rates are used to rate the home and calculate energy costs.
A HERS Report Includes:
- Overall Rating Index of the house as it is.
- Recommended cost-effective energy upgrades.
- Estimates of the cost, annual savings, and useful life of upgrades.
- Improved Rating Index after the installation of recommended upgrades.
- Estimated annual total energy cost for the existing home before and after upgrades.
A Rating Index is between 1 and 100. A lower index indicates greater efficiency. Cost-effective upgrades are those which will save more money through energy savings than they cost to install.
A HERS rating usually costs between $300 and $800. This could be paid for by the buyer, seller, lender, or real estate agent. Sometimes the cost of the rating may be financed as part of the mortgage. No matter how the rating is paid for, it is a very good investment because an EEM could save you or your buyer hundreds of dollars each year.
All buyers who qualify for a home loan under current underwriting guidelines, qualify for the EEM. The EEM is intended to give the buyer additional benefits on top of their usual mortgage deal. The lender will use the energy efficiency of the house, as determined by a HERS rating, to determine what these benefits will be.
Energy Efficient Mortgages can be used on most homes. Availability is not limited by location, home price or utility company. Your lender will help you choose which loan type is best for you.
Get an EEM on:
- Older homes qualifying for upgrades
- New or old homes not requiring upgrades
- New construction
It is best to have the HERS Rating done as early in the loan process as possible. This way, the Rating can be performed while other aspects of the loan are being processed. Closing the loan should not be delayed. You may get a larger tax deduction (consult with your tax advisor) with the EEM because the interest on mortgage payments is tax deductible. This can save you more money than paying for energy upgrades with a credit card, personal loan, or cash, none of which are usually tax deductible.
Each house is as unique as its owner. Benefits derived from the EEM will vary from one house to another, and the benefits in the examples in the Homeowner’s Guide may not apply in all cases. Your lender will be your best source of information on your own EEM benefits.
Please review the FHA EEM Disclosure for important information.
Call Theresa Springer (MLO #70667/NMLS #70667) today at 360-798-4161 to see the difference that working with an experienced home loan professional can make for you.
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