Over the last few decades we’ve seen purchasing and clothing trends begin to focus on green initiatives and eco-friendly materials. Not long after these trends began to take shape, the housing market began to focus on energy efficiency and green materials, building homes with earth friendly initiatives in mind. This housing movement has been very beneficial in saving homeowners money in monthly utility bills as well as has supported the use of recyclable materials, eco-friendly home appliances and more eco-friendly homes. In an effort to help current homeowners take advantage of these eco-friendly benefits, the FHA (Federal Housing Administration) created the EEM (Energy-Efficient Mortgage) program.
While FHA home loans can provide an array of benefits and opportunities, none are as specific as that of the EEM. The EEM program works with homeowners (or buyers) to finance the additional costs would be incurred to improve and modify an FHA home to energy efficient standards. This can include installing more energy efficient windows, purchasing energy star rated appliances or mounting solar panels to a house to receive the lowest utility payments and the highest energy efficiency.
How an EEM Works
An Energy-Efficient Mortgage works very similarly to a 203(k) FHA home loan. The lender approves the appraised upgrade amount and places those funds into an escrow account. After the loan has closed, the escrow funds are given to the borrower to pay for the installed energy efficient improvements and any remaining escrow funds are paid towards the EEM.
The EEM Program for Homeowners and Home Buyers
For current FHA homeowners, the Energy-Efficient Mortgage works in a way that is similar to a FHA streamline refinance. It is important to remember that the homeowner does not need to qualify for the additional money nor do they need to make a down payment when applying for an EEM. This type of mortgage loan works off of existing information and is funded through an FHA approved lender.
For new home buyers, the EEM programs works with the FHA 203(k) home rehabilitation program and follows the programs guidelines.
Energy-Efficient Mortgage Requirements for Eligibility
To be eligible for an EEM, the homeowner or future homeowner must meet the requirements for the highest loan amount limit insured by the FHA for the area the home is located in. They must also be able to make a down payment that is 3.5% of the total mortgage amount, including the additional costs of an Energy-Efficient Mortgage. As mentioned above, an EEM can be used in a way similar to or combined with a FHA streamline refinance loan.
Home requirements for EEM properties can be single family homes as well as one to four unit living accommodations, whether already existing or being built. It is important to remember that the installations to the home will begin after the loan has closed.
EEM to Receive Lower Monthly Utility Bills and Stay Eco-Friendly
Over the last few decades the housing market has begun to focus on energy efficiency and green materials, building homes with earth friendly initiatives in mind. In an effort to help current homeowners take advantage of the eco-friendly benefits that “going green” can provide (lower utility bills and eco-friendly housing) the FHA created the EEM (Energy-Efficient Mortgage) program. Please feel free to contact our team of expert loan officers to learn more about this excellent FHA mortgage program.