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What is an Energy Efficient Mortgage?

Energy Efficient Mortgage

Are electric bills becoming a growing concern? Looking to live a greener lifestyle in the new year? Want to save some money with an energy-efficient home? Maybe it’s time you looked into the advantages of owning an energy efficient home with the help of Fannie Mae’s HomeStyle® Energy Efficient Mortgage (EEM) program.

Using the Power of an Energy Efficient Mortgage

An Energy Efficient Mortgage (also known as an energy-improvement mortgage) is used to finance a home that is either already energy-efficient (i.e., an Energy Star-Certified home) or an existing property that is need of energy improvements. This kind of loan also allows a qualified borrower the opportunity for a larger mortgage than they might otherwise be eligible for and/or a lower mortgage rate. Like a regular mortgage, there are monthly payments to the lender.

Plug into a HomeStyle® Energy Mortgage

Whether you would like to purchase a new energy-efficient home or upgrade an existing one, a Fannie Mae HomeStyle Energy Mortgage can provide helpful loan purchase and refinance options. This type of EEM allows approved borrowers to buy an energy-efficient home or to pull cash out of your home’s equity to access funds for a wide variety of energy efficient projects—from energy efficient repairs and updates to landscaping and more.

This type of loan can be used for energy efficient improvements such as the following:

  • Water efficiency devices
  • Renewable energy sources such as solar panels, wind power devices, and geothermal systems
  • Storm surge barriers
  • Foundation retrofitting for earthquakes
  • Hazardous brush and tree removal in fire zones
  • Retaining walls to address mud and water flows
  • Weatherization (up to $3,500) for air sealing, insulation, windows, doors and more
  • Radon remediation system

The maximum financing amount for a HomeStyle Energy loan is up to 15% of the as-completed appraised property value of your home. Check with your lender to confirm which appliances and projects qualify for an energy-efficient loan.

Advantages of a HomeStyle Energy Mortgage

While you may be paying more money upfront and in your monthly payments with a HomeStyle Energy Mortgage, you may spend less annually on lower utility bills because of the energy efficient improvements you’ve made. Plus, if you stay in your home long enough, you may be able to offset your initial investment through your energy savings over the years. Also, if you’ve previously had a Property Assessed Clean Energy (PACE) loan, you might be able to repay it as part of a refinance with a HomeStyle Energy Mortgage. You might also qualify for tax credits for certain improvements made to your home. (Please consult your tax advisor for more information.)

As a Fannie Mae-approved lender, New American Funding offers fixed 15- and 30-year Energy Efficient Mortgages for purchasing, limited cash-out refinancing and high balances. These loan options can help you meet your energy efficiency needs, enhance the value of your home and save you money on utility costs. To find out more or to look into getting a mortgage preapproval, contact a trusted New American Funding Loan officer today!

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