RESIDENTIAL CONSTRUCTION

ENERGY EFFICIENT MORTGAGE – EEM

CCPC provides information on the benefits of building with Insulating Concrete Forms (ICFs) and the programs associated with this type of construction. ICFs positively affect the energy efficiency of a home and qualify for Energy Efficient Mortgages (EEMs).

What is an EEM?

An Energy Efficient Mortgage takes the savings associated with energy-efficient construction and/or products into consideration and uses those savings in the approval and qualifying calculations. It is recognized that the homeowner will have an increased cash flow because of the savings from lower energy costs.

How does it work?

When purchasing a new home an EEM will increase your buying power by "stretching" your debt-to-income ratio, allowing a larger portion of the borrower’s monthly income to be applied to the monthly mortgage payment.

Energy-efficient homes cost less to own than non-efficient homes, though they may start off with slightly higher price tags.

* Estimated mortgage payments are based upon principal and interest only and do not include taxes and insurance. Values indicated here are for example only and will vary from home to home.

Which Buyers and Homes are eligible?

All buyers who qualify for a home loan qualify for the EEM. The EEM is intended to give the buyer additional benefits on top of their usual mortgage deal. The lender will use the energy efficiency of the house, as determined by a HERS rating to determine what these benefits will be.

Energy Efficient Mortgages can be done on most homes. Location, home price or utility company does not limit availability. EEMs can be done on government (FHA and VA) conventional, Portfolio and Jumbo Loans. Your lender will help you choose which loan type is best for you.

Get an EEM on:

• Older homes qualifying for upgrades
• New or old homes not requiring upgrades
• New Construction

Who benefits from the Energy Efficient Mortgage?

Buyers:

• Qualify for a larger loan on a better home.
• Get a more comfortable home NOW
• Save money every month from "Day One."
• Increase the potential resale value of your home.

Sellers:

• Potential to sell your home more quickly.
• Make your house affordable to more people.
• Attract attention in a competitive market

Remodelers/Refinancers:

• Get all the EEM benefits without moving.
• Make improvements that will save you money.
• Increase the potential resale value of your home.

Available Energy Efficient Mortgage loans

Federal Housing Administration (FHA) EEMs:

The FHA Energy Efficient Mortgage covers upgrades for new and existing homes and is now available in all 50 states. Key features include:

• Loan limits may be exceeded
• No additional down payment
• $4,000 or %% of the property value *up to $8,000) may be financed
• No re-qualifying
• No new appraisal

Fannie Mae and Freddie Mac EEMs:

Fannie Mae secondary market guidelines permit approval lenders to increase ratios two percent on the debt-to-income requirements for energy efficient mortgages. An expanded qualifying ration helps purchases that are "maxed-out" on their income ratios; Freddie Mac allows a lender to use the projected utility savings as a "compensating factor."

Veterans Affairs (VA) EEMs:

The VA energy-efficient mortgage is available to qualified military personnel, reservists and veterans in all 50 states for energy improvements when purchasing an existing home. Key features include:

• $3,000 of upgrades may be financed based solely on documented costs
• Up to $6,000 may be financed if upgrades are deemed cost effective

203(k) FHA Home Rehabilitation Loans:

The FHA 203(k) program enables a homebuyer or investor to obtain a single loan to finance both property acquisition and complete major improvements after the time of loan closing. Can be used in conjunction with the FHA EEM. Key features include:

• Loan limits may be exceeded
• Total cost of improvements must exceed $5,000

Residential Energy Services Network's (RESNET) www.natresnet.org

Mortgage Companies Knowledgeable of ICFs in Texas