If you’re looking to buy a new or existing home that has a lot of energy-efficiency upgrades or if you’re looking to refinance your current home with the intent to improve its energy efficiency, then you may qualify for an energy efficient home loan. Energy efficient home loans are offered by a number of different private lending and mortgage companies that work with Fannie Mae, Freddie Mac, the Federal Housing Administration or the Office of Veteran’s Affairs, and they are designed to give homeowners more purchasing power in order to promote “greener” homes and more energy efficient choices in building and home improvements.
There are lots of great books available to help you make your home more energy efficient.
Mortgage For Buying An Energy Efficient Home
If you’re looking to purchase a newly built or existing home that is being advertised as “energy efficient” or ENERGY STAR rated, then you may be able to qualify for an Energy Efficient Mortgage, commonly called an EEM. With EEMs the home you want buy is given a HERS (Home Energy Rating Systems) report by a qualified Energy Rater. If the home scores high enough on the HERS report then you, the potential purchaser, will probably be given a larger line of credit with the bank. This allows you to buy a more energy efficient home, which is usually a little more expensive than a comparable home without the same energy saving upgrades.
The idea here is to promote green homes and the understanding is that the amount of money you save in utility bills each year will help you afford to pay off a slighly larger mortgage. Lots of different lenders offer EEMs though all probably offer similar deals. If you are looking to take out a mortgage on a house that you’re thinking of purchasing then it’s usually well worth your time to read up on Energy Efficient Mortgages to see if you could qualify for a larger loan due to the potential energy savings you could have. For any sort of EEM you’ll almost definitely need to have your home inspected and be given a Home Energy Rating System (HERS) report.
Home Improvement Loan to Make An Existing Home More Energy Efficient
The existence of the Energy Efficient Mortgage makes it possible for existing home owners to greatly increase their own home’s efficiency with a loan as well. This can be done in two ways:
Purchasing An Existing Home with a Mortgage: When you are buying an older home but want to make energy efficient home improvements right away, then you may be able to qualify for an EEM. In this scenario the amount of the mortgage can be increased if the improvements that are planned are deemed to save the homeowner a substantial amount of money in utility bills over the life of the products.
Buying Energy Efficient Home Improvements by Refinancing: If you are currently living in a home that you’d like to make more energy efficient with some major renovations or improvements, then you may be able to refinance your existing mortgage with an EEM. You would essentially refinance your home by getting a new mortgage that would pay off your existing mortgage and still have money left over to pay for the improvements you have planned.
A loan like an Energy Efficient Mortgage can be used to add solar panels to your home.
There are lots of different ways you can borrow money to make your existing home more energy efficient. Here are some:
Energy Efficient Home Improvements
- Installing a more energy efficient heating system.
- Installing a more energy efficient cooling system.
- Adding insulation to an attic or crawl space.
- Adding insulation to external walls.
- Insulating air ducts and water pipes.
- Installing newer energy efficient windows.
- Installing new energy efficient doors.
- Updating a broken or cracked chimney.
- Installing solar energy systems (active or passive).
The best part? Depending on your skill level and willingness to work, some mortgage lenders will allow you to do the home improvement yourself, giving you more money to purchase more energy efficient products without worrying as much about the installation costs.
And don’t forget that even if you’ve borrowed money to make your home more green, you could still realize additional savings on your income taxes. Though the details vary slightly from one year to the next, there are still a remarkable number of tax deductions you can take for home improvements.
Whether you’re buying a new home and then upgrading it to be more energy efficient or you’re refinancing your current home in order to pay for some high efficiency upgrades, the Energy Efficient Mortgage and is one of the few home loans designed to pay you back over time. If done correctly then you’ll find that what you are paying back to the lending company for the loan should be roughly equal to the amount of money you are saving in electrical, gas and water bills each month. Once you’ve paid off the EEM those extra savings go straight into your own pocket.