How to Greenify your Home with an Energy Efficient Mortgage

Energy Efficient Mortgages in TowsonEnergy Efficient Mortgages or EEMs have been around for quite some time now — maybe long enough that plenty of borrowers have actually forgotten about this home financing option. Perhaps you’re reluctant to purchase an older, but affordable home because it requires significant renovations or energy efficient upgrades, then an energy efficient mortgage could work for you. You could even roll your EEM into an existing mortgage and utilize your EEM for greener home improvements.

What Exactly are Energy Efficient Mortgages?

In general, you could choose from three basic loan types. These include conventional loans bought by Freddie Mac and Fannie Mae, VA or Veterans Affairs loans, and FHA or Federal Housing Administration loans. While the maximum loan amount will depend on the specific loan type, the primary concern of lenders will depend on the energy efficient upgrades, which in turn will offset the upgrade’s costs, says

Aside from getting significant savings on your utility bills every single month, energy efficient upgrades will likewise increase your home’s value, and help in saving precious energy resources. Below are the most common home improvements that lenders deem eligible for energy efficient home loans:

  • New energy efficient roofs and windows
  • Weatherization upgrades
  • Insulation in floors, walls, or attics
  • Installation, repairs, or replacements of duct system
  • New energy efficient windows
  • Cooling and heating systems
  • Water heaters and energy efficient appliances like refrigerators, dryers, and washers

Should You Go For Energy Efficient Mortgage?

Why not, you have nothing to lose and everything to gain since you could finance up to 100% of your earth friendly upgrades. You don’t even have to qualify for extra financing options since your energy savings will most probably offset your monthly mortgage payments. You see, your lender will calculate the amount you stand to save on your monthly utility bills when you add your green upgrades, and the loan underwriter will apply that amount to lower your ratios. This is extremely crucial if your DTI or debt to income ratio is already at the amount allowable for monthly mortgage payments.