What are (EEMs) Energy Efficient Mortgages?

In a time of escalating fuel and energy costs and an increase in energy efficient building practices, materials and appliances-- we wonder if this type of loan program may gain popularity? Here is some infomation we gathered on this interesting and rarely mentioned program:
What is an EEM?
When you are buying, selling, refinancing, or remodeling your home, you can increase your comfort and actually save money by using the Energy Efficient Mortgage (EEM). It is easy to use, federally recognized, and can be applied to most home mortgages. EEMs provide the borrower with special benefits when purchasing a home that is energy efficient, or can be made efficient through the installation of energy-saving improvements. EEMs make it easier for borrowers to qualify for loans to purchase/ refinance homes with specific energy-efficiency improvements.
Conventional EEMs
Conventional EEMs can be offered by lenders who sell their loans to Fannie Mae and Freddie Mac. Conventional EEMs increase the purchasing power of buying an energy efficient home by allowing the lender to increase the borrower's income by a dollar amount equal to the estimated energy savings. The Fannie Mae loan also adjusts the value of the home to reflect the value of the energy efficiency measures.
FHA EEMs
FHA EEMs allow lenders to add 100 percent of the additional cost of cost-effective energy efficiency improvements to an already approved mortgage loan (as long as the additional costs do not exceed $4000 or 5 percent of the value of the home, up to a maximum of $8000, whichever is greater). No additional down payment is required, and the FHA loan limits won't interfere with the process of obtaining the EEM.
VA EEMs
The Veteran's Administration (VA) EEM is available to qualified military personnel, reservists and veterans for energy improvements when purchasing an existing primary home. The VA EEM caps energy improvements at $3,000-$6,000.
HERS, or Home Energy Rating Systems
A HERS report is similar to a miles-per-gallon rating on a car. HERS are program s which provide evaluations of individual primary homes energy-efficiency. A HERS report is prepared by a trained Energy Rater. Factors such as insulation, appliance efficiencies, window types, local climate, and utility rates are used to rate the home and calculate energy costs
To learn more about EEMs contact:
US Dept of Energy: http://www.energystar.gov/index.cfm?c=bldrs_lenders_raters.energy_efficient_mortgage
Fannie Mae: http://www.fanniemae.com/index.jhtml
Freddie Mac: http://www.freddiemac.com/
HUD: http://www.hud.gov/offices/hsg/sfh/eem/eemhome.cfm
Additional information about writing energy-efficient mortgages can be found on the Web sites:
U.S. Department of Housing and Urban Development (HUD) and the Residential Energy Services Network (Resnet)
For all of your FHA insured and Conventional Mortgage Appraisals contact:
Bennett Appraisals http://www.bennett4appraisals.com/
Disclaimer **All information deemed to be accurate but not guaranteed.
Disclaimer** Bennett Appraisals does not endorse any loan programs, we just appraise residential properties in Whatcom, Skagit and Snohomish Counties WA.