that old house energy-efficient
So if you are thinking overhaul,
consider an Energy
Efficient Mortgage. When buying, selling, refinancing or remodeling a house,
homeowners can actually save money in the long run with the still little-known
EEM, which is federally recognized, available in all 50 states and can be applied
to most home mortgages, says the U.S. Department of Energy.
Because such energy-saving homeowners will have lower
utility bills and thus more cash in their pockets at the end of the month, they
can afford a larger mortgage payment, plus have a more comfy and marketable house,
the logic goes.
The Fannie Mae energy-mortgage program allows
homeowners to borrow up to 15 percent over the value of a home with no additional
down payment and no additional income to qualify, said Steve Baden, executive
director of RESNET, which promotes home-energy ratings systems and energy mortgages.
first step, he says, is to have a Home Energy Ratings System efficiency inspector
(cost: about $300) to probe the place and give it an energy rating similar to
a car's miles-per-gallon estimate. Factors such as insulation, appliance efficiency,
window types, sealing, climate and utility rates are all considered. The home
is then rated between 1 and 100, with higher scores indicating greater efficiency.
consumer then takes that information to a lender and asks for an energy mortgage.
In 2001, Countrywide Home Loans began marketing the EEMs.
A few others have followed suit, such as Indigo
Financial Group, a mortgage company that specializes in EEMs. You can even
use Fannie Mae's "Find
a lender search" to locate a mortgage company in your state that offers
Your savings may vary
Regional energy ratings will vary, as will materials and appliances currently
For example, horizontal-access washing machines,
which have become the rage in Europe, are now catching on in much of the United
Horizontal units fill only their bottom portion and
in essence splash clothes through a wash. According to the Environmental Protection
Agency, horizontal-axis washing machines use 35 to 50 percent less water and 50
percent less energy per load than conventional units, which fill their entire
tubs to begin a wash. People on well systems in high-drought areas find them very
Insulation materials, wall thickness and other
components will also differ market to market.
Now on the horizon
are energy-efficiency tax incentives for both residential and commercial construction.
The recently enacted Energy
Tax Incentives Act of 2005 will kick in incentives, in the form of tax credits,
for home energy improvements.
Under the new Energy Bill, homeowners
can claim a tax credit of 10 percent of the cost of certain energy improvements,
up to $500 total. Homeowners who install solar technology get more generous credits:
30 percent of the cost, up to $2,000. Such tax credits, which can be claimed on
2006 and 2007 tax returns, can be considered as additional income in loan qualification,
says Michelle Desiderio, senior product developer at Fannie Mae.
McLinden is a freelance writer based in Texas.