The increase in our use of energy can add financial stress to any person’s life, and if you are someone who is particularly interested in being eco-friendly, you may not like the negative impact you are having on the earth. Many people wish that they could afford the upgrades to cut back on their energy use, but often find that they cannot afford the upgrades to their home to do so.
The last thing a person may think is that a mortgage can be the solution to their energy problems. Thanks to Energy Efficient Mortgages (EEMs) offered by the Federal Housing Administration (FHA), you can fund those new green upgrades to your home. While the FHA is usually the primary source of Energy Efficient Mortgages, the program is also available through the Veteran’s Administration, as well as sometimes offered by the lender themselves.
The first step to qualifying for an EEM is to qualify for a normal mortgage. Once qualified, you will need to have your home inspected by a professional Energy Rater. The Energy Rater will prepare a report on your house, and grade it on a scale of 1-100. The lower the score the more energy efficient your house is. An added benefit to having a professional Energy Rater come and inspect your home is that they are able to suggest ways to increase your energy efficiency. This is great for someone who has no idea where to get started, or for discovering improvements you may not have previously known about. You will also receive an estimated score of your home with the suggest upgrades.
With this report in hand, it is time to talk to a loan officer. The officer will look at the report and see the savings in energy costs that you will gain from making the suggested improvements in the report. This is important, as it will be calculated into the size of the loan that you will be eligible to take out. In most cases, the savings from the energy bills will more than offset the monthly costs of your mortgage payment. This will be taken into account when the loan officer decides how much money you qualify to borrow. Often times the extra savings in energy will qualify you to add the costs of the upgrades to your home.
EEMs can also be looked at as a long term investment. While initially you can save money, the upgrades to your home will continue to benefit you even after you have paid off your mortgage. If you ever need to sell your home, you will have another tool to market your home and possibly increase its value. Overall, EEMs are a great and affordable way for to follow a green lifestyle and save yourself some money.
Patrick Merryman is an author for the Total Mortgage Blog. Total Mortgage is an online lender offering some of the lowest mortgage rates available.
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