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Making that old house energy-efficient

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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.

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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.

The 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.

A 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 EEMs.

Your savings may vary
Regional energy ratings will vary, as will materials and appliances currently in vogue.

For example, horizontal-access washing machines, which have become the rage in Europe, are now catching on in much of the United States.

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 beneficial.

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.

Steve McLinden is a freelance writer based in Texas.'s corrections policy-- Updated: Dec. 12, 2005
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