Energy Efficient Mortgages
Energy Efficient Mortgages (EEMs) are special loans that take
into account the energy efficiency of a home. The premise
of EEMs is that an efficient home will use less energy and
therefore cost less to operate. The resulting monthly savings
in operating costs can be allocated toward the mortgage payment.
This increased purchasing power can help some buyers qualify
to buy a bigger or better home. For other buyers, the added
monthly spending power can make the difference in getting
loan approval. All other aspects of the mortgage are the same
as for non-EEM loans. A Home Energy Rating, provided by an
accredited Rater working with a Home Energy Rating System
(HERS) is necessary to apply for an EEM. Homeowners and homebuyers
can order an Energy Rating from an E-Star™ Rater who is
trained, accredited, and quality controlled through E-Star’s
HERS program.
Advantages of an EEM
An EEM gives buyers more purchasing power, thus allowing them
to qualify for a more expensive home or add more options and
upgrades. In some cases, an EEM might make the difference
in qualifying a buyer for a loan. Use the mortgage
calculator to observe the additional purchasing power
a buyer can get with an EEM.
Energy Improvement
Mortgages
If an older, otherwise charming home receives
an E-Star Energy Rating lower than 70 points, an Energy Improvement
Mortgage (EIM) may be the answer. This product lets the buyer
roll improvements recommended by the E-Star program into the
mortgage for purchasing or refinancing a home at the same
rate and term. With an EIM, buyers can add comfort and savings
to the charm and character of an older home. Lenders determine
the allowable improvements and maximum costs depending on
the E-Star program rating recommendations and the specific
type of loan being considered.
Energy
Equity and Home Improvement Loans
E-Star Energy
Ratings help a homeowner identify cost-effective home improvements
to increase the energy efficiency of their homes. Some lenders
will consider the benefits of such improvements as part of
financing a larger remodeling project.
Required Rating Score
for Eligibility
To be eligible for EEMs in Colorado,
existing homes must be 30% more efficient than what is required
by energy efficiency provision of the applicable, local building
code. For homes built prior to 1995, this level of efficiency
is around 76 points on the E-Star rating scale. New homes
must be 10% more efficient than the requirements of the local
building code. For homes built in 1995 or later, this is typically
around 82 points on the E-Star scale. Fannie Mae endorses
E-Star ratings and has issued Energy Mortgage guidelines for
Colorado. If the seller has not had the home rated, the buyer
can order an Energy Rating through E-Star.
More Information
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