The Energy Efficient Mortgage can be added to an Oregon FHA203b but more likely an FHA203k. This Energy Efficient Mortgage gives the borrower/buyer the ability to add an additional $8,000 to their mortgage for energy related upgrades. It is available on a purchase or a refinance and should be a really great deal, however, I have found that the actual implementation might be troublesome. Cost versus benefit may not pencil out in the long run.
This comes from the FHA Homes and Communities website:
The TWO SIDES of the EEM COIN
Finance Energy Improvements!
- Cost-effective energy-saving measures may be financed as part of the mortgage
- Make an older, less efficient home more comfortable and affordable!
Increase Your Buying Power
- Stretch debt-to-income qualifying ratios on loans for energy-efficient homes!
- Qualify for a larger loan amount! Buy a better, more energy efficient home!
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:
- 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 which will actually save you money.
- Increase the potential resale value of your home.
Pay for energy improvements easily, through your mortgage. Your lender can increase your loan to cover energy improvement costs. Monthly mortgage payments increase slightly, but you actually save money because your energy bills will be lower!
The problem comes from the next section, the HERS or Home Energy Rating System. Anytime you get an EEM added to your loan, you will need a HERS. That is a problem in Eugene as, apparently, there is only one HERS inspector and he charges approximately $4,000 for doing the inspection. Hardly makes the $8,000 loan attractive when you have to pay $4,000 just to qualify. According to the FHA website, the HERS rating usually costs between $300 and $800. Even if able to get it done on the upper end, that would make it a 10% cost for the loan, again, questionable economics.
I think the idea of a EEM is excellent, especially in today’s raising energy cost environment. Maybe it would be better if the EEM was a larger amount, I am not sure or maybe it would be better if you could use the EEM for financing Energy Star appliances without the HERS. Overall, the program, to my mind, needs some work. I think one solution is that if you are a seller of a home in need of energy improvements, it might be worthwhile to have a HERS inspection done prior to listing the home. Just a suggestion but it might make your home more attractive.
If you are interested in an FHA loan, call me today and let’s get together to discuss your options. I am always willing to spend time with people to make sure they are getting the right thing for them. You can reach me at 541-342-7576/541-221-3455 cell or by e-mail. Don’t wait, rates are excellent, prices are down, and negotiations are going in the benefit of the buyers.
