Choosing to have a more energy efficient home will lower your utility bills and put more money in your pocket each month. There are mortgage options available to you called Energy Efficient Mortgages (EEMs.) EEMs help homebuyers and homeowners save money on their utility bills by enabling them to finance the cost of adding energy efficient features to a new or existing home as part of their home purchase or refinance mortgage. Monthly mortgage payments increase slightly, but you actually save money because your energy bills will be lower! Plus you may get a larger tax deduction with the EEM because the interest on mortgage payments is tax deductible. This can save you more money than paying for energy upgrades with a credit card, bank loan, or cash, none of which are usually tax deductible. *Consult with your tax professional for individual advice on potential tax deductions.
How does it work?
If your utility bills are lower, you can allocate a larger portion of your income to housing expenses. That is where the EEM comes in. There are two options with the Energy Efficient Mortgage.
1) You can finance energy efficiency improvements to the home you are purchasing or refinance your present home and include the energy efficient improvement costs in your new loan. 2) Increase your buying power! You can stretch the debt-to-income qualifying ratios on your loan when you purchase a qualifying energy efficient home. You can qualify for a larger loan amount because you will be saving money on your utility costs each month. Therefore you can buy a better more energy efficient home!
An EEM can only be done if an official Home Energy Rating Systems Report (HERS Report) indicates that it will SAVE YOU MONEY. A HERS Report is similar to a miles-per-gallon rating on a car. It provides an evaluation of a home’s energy efficiency performance and recommends cost effective upgrades. It is prepared by a trained Energy Rater, and will consider such factors as insulation, appliance efficiencies, window types, local climate, and utility rates to rate the home and calculate energy costs. Rating scores are between 1 and 100. Higher scores indicate greater efficiency. Cost-effective upgrades are those which will save more money through energy savings than they cost to install. A HERS Report could be paid for by the buyer, seller, lender, or real estate agent. Sometimes the cost of the rating may be financed as part of the mortgage. No matter who pays for it, it is a great investment as an EEM could save you hundreds of dollars each year in utility costs. Back to Going Green |