The Energy Efficient Mortgage (EEM) is one of the best kept secrets in our business. Why? Because most people have no idea what it is and don’t want to invest the time to learn about its’ cost saving powers. In a world of sound-bites, tweets, and bumper-sticker one-liners, who has time to learn about energy-efficient mortgages? Boooring…
Why should you care about an EEM? Congress mandated a pilot program in 1992 (that went national in 1995) to help homebuyers or homeowners borrow more money to help pay for energy-efficient improvements or upgrades. The result is an energy-efficient home with lower monthly utility bills and a decreased footprint on the environment. And it’s all done without tapping into your savings.
You can finance these energy-saving features to new or existing homes as part of a FHA or VA insured loan. The goal here, is that the money you save on your energy bill from these improvements (i.e. duct sealing, new windows, energy-efficient water heaters, new heating and air-conditioning systems, etc.), will exceed the slightly higher monthly mortgage payment.
It is expensive! Actually, it’s not. Yes, it will add principle to your to your mortgage loan amount ($25 – $75/month). However, the overall money that you save in energy will be greater than the money you spend on the improvements (save $50 – $100/month). That’s why FHA will insure the loan at the same interest rate as your stand-alone FHA or VA loan!
My Realtor didn’t tell me about it! Many working agents today don’t have a lot of experience with this underutilized program. Thus, they don’t actively market it to their buyers. Although, it may sound complicated, the EEM is actually a lot easier than it looks. So, send your agent my way and I will give them my 5 minute EEM 101 class.
My Lender doesn’t do these types of loans! (See answer above). If they do FHA or VA loans they also can do EEM, as well. Many loan officers stay away from offering this very beneficial program to their clients. It could be that they don’t understand the benefits (Read: must take my EEM 101 class) or they think it is too much work; once you get the hang of it, it’s actually a very simple process.
Who is EEM for?
Buyers – More comfortable home: better indoor air quality, added value, lower energy bills.
Sellers – The demand for energy-efficient homes will continue to grow as energy costs rise.
Interest Rates – Same low rates and FHA loans are “assumable”. Thus, as rates rise with an improving economy, buyers can assume the existing low rate.
Government energy and tax rebates – Take advantage of rebates while they are available!
Primary residences – Single family, condos, townhouses, even 1-4 multi-family units.
Refinance or Purchases – First time homebuyers or repeat buyers.
In conclusion, borrowers love being able to finance the greening of their home at low-interest rates that are tax-deductible. I love these loans because they make strong business sense, especially as energy costs increase, and they make the properties more valuable.
Looking for more info? Check out the links below for more details:
United States Department of Housing and Urban Development (HUD)
FHA 203(K) Streamline rehabilitation loans by Dan Tharp, can be combined with the EEM
Want to talk to a real person, feel free to call or email Dan Tharp at 916-515-1626 Ext 101 or email him firstname.lastname@example.org.