FHA’s Energy Efficient Mortgage Program Can Help You Save Money
Whether you’re buying a home for the first time or you’ve already fulfilled your homeownership dream, saving money could be on top of your mind especially if your family lives on a budget. If you want to lower your monthly electricity bill, the U.S. Federal Housing Administration or FHA can help you finance energy-efficient improvements on your home through its Energy Efficient Mortgage program (EEM).
Important things you need to know about EEM
The EEM program allows you to make energy-efficient improvements if you use an FHA-backed mortgage to buy or refinance your primary home. The maximum amount of energy package that you can add usually depends on a few factors. If you will combine your EEM with the Section 203(k) Rehabilitation Mortgage Insurance program, you can borrow up to $35,000 to make home repairs and other improvements that could add property value. You can also combine your EEM with FHA’s Solar and Wind Technology so you can take a higher mortgage to cover the purchase and installation costs of a new solar or wind system. Your FHA-approved lender can give you an idea of the amount you can use for energy improvements. Initially, you need to get a home energy assessment, conducted by a qualified home energy rater/assessor/auditor, to know the cost-effective opportunities to make your home energy efficient.
An improvement to an existing home is considered cost-effective if the money you will save in electricity bills is either equivalent to or greater than the amount spent on making the improvement. For newly built homes, on the other hand, an improvement is considered cost-effective if it exceeds the most recent standards of the International Energy Conservation Code or IECC.
The energy efficient-improvement projects you can implement should be based on the recommendations of the home energy assessor. The assessor may recommend home improvements like energy-saving equipment, and technologies that use the sun or wind to control room and water temperature.
EEM loan application is easy
All you have to do is to contact your FHA-approved lender if you want to apply for an EEM on top of the FHA-backed mortgage you took for your primary home. Moreover, an experienced loan advisor can also give you insights about the EEM program.
The U.S. Department of Housing and Urban Development (HUD) first implemented the EEM program in five states. After a few years, HUD rolled out the program to help homeowners across the nation save money on their utility bills.
Final thoughts about the EEM program
EEM is worth considering if you want to finance a home improvement that could lower your electricity bills and help you save money in the long run. A qualified home energy assessor recommends the energy package or the type of improvements that could help you improve your home’s energy efficiency. You can only apply for EEM if you took out an FHA loan to buy or refinance the mortgage on your primary residence.