Q: Why should my home be energy efficient?
A: That’s easy! An energy efficient home is worth more money. It’s more cost efficient to operate because it uses less energy. It’s more comfortable to live in, staying warmer in the winter and cooler in the summer. It has better air quality, releasing less pollutants into the air. Homes produce 2x the amount of pollution as a car.
Q: What is an EEM?
A: An EEM is an Energy Efficient Mortgage. It allows you to purchase an energy efficient home or upgrade your existing home. It recognizes the savings a homeowner will see in their utility bills and the value is added to the home. EEMs are available through the FHA, VA, and the private mortgage market. In fact, the FHA program offers up to $16,000 to the homeowner for energy efficient upgrades. Ask Enersolve how we can help you with an EEM on your next home.
Q: How do borrowers benefit from using an EEM?
A: Borrowers benefit because the estimated energy savings are added to the borrower’s income to allow the purchaser to qualify for a larger total mortgage amount. EEMs also allow the borrower to include the costs of energy improvements into the total mortgage amount. In fact, 100% of the upgrades can be financed (up to 15% of the value of the home) and paid out over the life of the mortgage. This allows you to save your cash when moving and recoup more of it over the life of the loan with energy saving features. Finally, the value of the home is adjusted by the value of the energy efficient improvements in the appraisal. This ensures the homeowner with a better quality home either for less or the same amount of money as a traditional mortgage, but the home uses less energy and costs less to operate.
Q: Which homes qualify for EEMs?
A: Single family, owner occupied residences, PUDs and condominiums. Both new construction and existing homes qualify. Both new home purchases and homes in need of refinancing qualify.
Q: Does an Energy Star Home qualify for an EEM?
A: Yes. The EEM calculates the homeowner’s savings in operating the home, and adds that to the income of the buyer, allowing the buyer to qualify for more money. It is estimated that this will help over 6% more homeowners qualify for mortgages.
Q: What qualifies a home for an EEM?
A: In existing homes, a RESNET rating, performed by a certified HERS rater, is used to calculate energy saving potential and cost effective energy efficient improvements for the home. In new homes, if the home if energy efficient, it should already have a rating. Once the mortgage is complete on a new home, a final diagnostic is performed to confirm the rating.
Q: How does the HERS rating work within the EEM?
A: The rating report compares the energy efficient home against a similar home meeting the minimum energy requirements of the IECC (International Energy Conservation Code), often called a reference home. The rating confirms that the home built achieves the intended design and performance specifications set forth by the US Government, the US Mortgage Industry, and RESNET. In homes that are already energy efficient, the rating report will provide the estimated monthly energy savings, as well as the value of the potential energy efficient measures available.
Q: What about my old house; can I get an EEM on my old (energy inefficient) home?
A: Yes! Absolutely! In fact, the rating will identify and recommend energy efficient improvements and the estimated savings these improvements will bring. The home buyer can then include the costs into the amount of the mortgage loan. The rating will only recommend improvements that will pay themselves back over the lifetime of the mortgage. It will also rank and prioritize improvements so you get the most bang for the buck.
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