The FHA Energy Efficient Mortgage. It certainly isn't a mortgage type that gets a lot of press but the more I learn about it, the more I'm convinced it definitely should. According to Preston Luckett, loan consultant with Guild Mortgage, the FHA Energy Efficient Mortgage (EEM) is a normal FHA loan where the borrower finances 100% of the expense of an œenergy package which saves the buyer more in
energy costs over time than the cost of the improvements themselves.
FHA usually doesn't allow for anything like this but their reasoning makes sense. If you replace that incredibly inefficient furnace and dryer with brand new, energy star rated ones, then over the life of the loan, you will actually save more in utility costs than the costs of the improvements. Plus you will be helping out the environment so it's a win win for everyone.
The way it works is quite simple too, here are the steps.
1) At time of contract, buyer obtains a HERS Report (home energy report from energy consultant) which determines the costs of energy improvements and expected energy savings.
2) Lender verifies savings to borrower are more than the cost of the improvements.
3) Lender finances 100% of the cost of these improvements into the loan.
4) Borrower given 90 days after closing to complete work.
5) At completion, lender has property inspected by HERS energy consultant to verify work has been completed properly.
There aren't the hoops to jump through as you would find with a 203K rehab loan which makes this all the more attractive. So the next time you find that perfect house minus the 40 year old appliances, consider this type of loan, perhaps it will be the solution to all your problems, Real Estate problems at least.
Socials