Financing An Energy Efficient Home: Buying Boulder Real Estate The “Eco-Friendly Way”

The average homeowner spends close to
$1,300 a year on utility bills. This is often true even with Boulder real estate .


But an energy-efficient home—with such features as proper insulation, high efficiency heating and cooling systems, and energy-efficient windows—can lower your utility bills by 10 to 50 percent. It’s easier than you may think to enjoy the savings and comfort of an energy-efficient home. Since an energy-efficient home is cost-effective, there are financing programs available from mortgages to home improvement loans, which allow more people the opportunity to live in such a home. Thats called and Energy Efficient Mortgage or EEM to some people.


Kind of makes sense: Energy Efficient Home ::: Energy Efficient Mortgage. Okay, so what’s that mean to you and how do you get one, or how do you know you even want one.


If you read my post from the 23rd of the Home Energy Rating System, you’ll have an intro into the ideas around this.


When it comes to energy-efficient financing— whether you want to purchase, refinance,
or remodel a home—it’s best to work with lenders or a Boulder Realtor who is familiar with home energy ratings and program requirements.


If you’d like a home energy rating report, it’s also best to work with a certified energy rater. Yep, we talked about that in yesterday’s posting also and you can get more info at the US Dept. of Housing and Urban Development website.


In all instances, it’s always a good idea to ask for references and check companies with your local better business bureau.


Some additional useful information if you’re considering an EEM:


You can benefit from energy-efficient financing whether you’re buying, selling, refinancing, or remodeling a home. If you’re looking to buy an energy-efficient home, you can qualify for a better, more comfortable home because with lower utility costs, you can afford a slightly larger mortgage payment. You can also obtain financing to make energy-efficient improvements to an older home before moving in or to your existing home. And if you put your home on the market, you can use its energy efficiency as an attractive selling point.


Energy-Efficient Financing Programs
You can apply for energy-efficient financing through a government-insured or conventional
loan program. Some states even have programs for their residents, so it’s a good idea to contact your state energy office to find out if your state does. There are two types of energy-efficient mortgages (EEMs): one for a new home and one for an existing home. With an EEM, you can purchase or refinance a home that is already energy-efficient. Or you can purchase or refinance a home that will become energy-efficient after energy saving improvements are made.


Most energy-efficient financing programs offer both types of EEMs, as well as home improvement loans for making energy efficiency upgrades to your existing home. Here’s an overview of some of the energyefficient financing programs available. Each program is subject to change; therefore, you should contact a program directly for the most current, detailed information.


Fannie Mae
Fannie Mae—a private, share holder owned corporation—operates under a congressional charter that directs it to channel efforts into increasing the availability and affordability of homeownership. It doesn’t lend money directly to home buyers; it purchases mortgages from lenders, ensuring that funds are available.


Fannie Mae encourages lenders to offer its EEM by providing incentives and specific criteria for those that it’s willing to purchase from lenders. Both existing and new homes fall under this EEM

• Several approved home energy rating methods and programs, not just a HERS, are allowed to evaluate a home’s energy efficiency.
• For existing homes, the cost of improvements is limited to 15 percent of its total cost. There is no limit imposed on the cost of improvements for new construction.
• A home buyer can finance 100 percent of the energy efficiency improvements without increasing the down payment. Residential Energy Efficiency Improvement Loan Fannie Mae is partnering with utility companies to provide loans to utility customers for the installation of energy-efficient home improvements.

The loans feature:
• A below-market interest rate
• An unsecured financing option
• Up to $15,000
• A term of up to 10 years
• A “whole-house” or bundled approach to efficiency improvements.

Freddie Mac
Freddie Mac is a stockholder-owned, congressionally chartered corporation that works to create a continuous flow of funds to mortgage lenders in support of homeownership and rental housing. It purchases mortgages from lenders and packages them into securities that are sold to investors, providing homeowners and renters with lower housing costs and better
access to home financing. Like Fannie Mae, Freddie Mac provides incentives and criteria, as well as flexible guidelines, for EEMs that it’s willing to buy, which encourage lenders to offer
them. However, the EEMs are limited to purchasing existing energy-efficient homes or those to be retrofitted or renovated for energy efficiency.

• Several home energy rating methods and/or documentation, not just a HERS report, are acceptable.
• Lenders can exceed the standard 2 percent debt-to-income stretch at their own discretion.
• It allows a broader range of energy efficient improvements than most EEM programs.


There are many posts on my blog relating to Finance and Mortgage as well as Tips and Advice .


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