FHA Energy Efficient Mortgage
As we all know energy costs continue to increase. Many communities are supporting energy efficiency initiatives to conserve energy. A nice feature built into the FHA loan program is the ability to add qualified energy efficient improvements right into the mortgage. This provides every FHA borrower the ability to improve their home, conserve energy costs, and save money as energy prices increase.
Energy Efficient Mortgage Guidelines
|Max Loan Amount:||$400,000 varies by county|
|Maximum Improvent Costs:||5% of home value at time of purchase|
|Appraisal:||Not required, energy audit is|
|Interest Rate:||Current market|
|Improvements:||Must reduce energy consumption|
Qualified Energy Efficient Improvements
Along with the standard loan documentation required to do a streamline refinance an energy audit report and the list of repairs & costs will be reviewed by the underwriter. The approve your EEM loan the energy audit report must show the repairs/ improvements will net a savings on your energy bill greater than the monthly cost of financing those repairs. As an example, if you roll $10,000 of improvements into your mortgage at an increase in payment monthly of $35 your energy bill must go down by $35 or more. Additionally, only repairs that qualify as energy efficiency repairs are allowed. Contact us for more details on what is & is not accepted.
Benefits of an Energy Efficiency Mortgage
- Light on documentation
- No Appraisal
- Hedge against energy cost increases
- Fund those repairs without hurting your savings
- Conserve energy
- Low pocket closing costs
Energy Efficient Mortgage FAQ’s
Do I have to use a contractor? No, but you may want to rely on the energy audit professionals to help coordinate to ensure the energy savings promised in their report.
When does the improvement money get paid out? Once the repairs are made the request is made by the escrow company for funding to be delivered & disbursed. Often, a final inspection will occur to ensure the repairs are made as promised. This can take several weeks.
*Limited time OAC