By Jennifer Gonzalez, with contributions from Sue Greeno and Joanne Johansen
Jenn Gonzalez is an EcoBroker Certified® Realtor who has been working with buyers and sellers and investing in Connecticut real estate for over nine years. Sue Greeno and Joanne Johansen are mortgage lenders with expertise in Green Mortgages.
Although first introduced by the U.S. Government in the early 1980’s, Energy Efficient Mortgages (EEMs), and Energy Improvement Mortgages (EIMs) are finding a new popularity among home owners and home buyers alike. These “Green Mortgages” can be highly beneficial to both buyers and sellers, but can also seem more confusing than they actually are. Here are the basics that every real estate consumer should know about EEMs and EIMs before they buy or sell their next home:
Who is right for an EEM/EIM?
1) Any home buyer who wants to purchase a new energy efficient home AND wants to qualify for more “home” should consider an EEM.
2) Any existing home buyer who wants to qualify for increased financing to make energy improvements when purchasing should consider an EIM.
3) Any existing home owner who wants to enjoy utility cost savings, make energy efficient improvements and needs to finance these improvements should consider an EIM.
What Exactly is an EEM/EIM?
These “green mortgages” are specifically geared towards consumers who are highly conscious of their environment and the effect of energy usage on that environment and their surrounding community. The EEM credits a home’s energy efficiency in the mortgage itself. These mortgages reward consumers with:
1) Allowing borrowers to afford an energy efficient new home. The increased affordability is due to estimated energy savings.
2) Less upfront cost to buyer for same level of home value.
3) Allowing home owners to finance cost-effective energy improvements and energy savings that will positively impact the environment
4) An improved standard of living
5) An increased resale value due to efficiency rating
6) Less pollution in the community
Where/How Do I Apply for an EEM or EIM?
An EcoBroker can refer you to a Mortgage Lender who specializes in Green Mortgages and will help you with the EEM/EIM process. If you are pursuing a home-improvement EIM, ask your lender specifically about financing your improvement(s) via an Energy Improvement Mortgage. If your lender does not have an EIM program, again, contact your nearest EcoBroker. Your EcoBroker can schedule any necessary inspections and immediately refer you to the nearest mortgage lender who is knowledgeable about Energy Efficient Mortgages, to get you started.
When Should I Investigate an EEM or an EIM?
Immediately – if you are presently looking for a new home, either new construction or existing real estate. You owe it to your pocketbook to investigate these mortgages, whichever applies to your situation.
Immediately – if you have begun investigating making energy improvements, such as, a new furnace or central air, new plumbing, solar panels, geothermal heating, a new energy-efficient roof, or any other type of cost-saving, energy-efficient home improvement. Ask your lender or an EcoBroker about an EEM or EIM.
• First Mortgage on New Construction -- Ask your EcoBroker about an EEM
• First Mortgage on Existing Home – Ask your EcoBroker about an EIM
• Second Mortgage/Refinance/Home Improvement Financing – Ask your EcoBroker or Lender about an EIM
Why Should I Consider an EEM or EIM?
EEM and EIM lenders know that you are going to save money on your utilities and other expenses specifically due to the energy-efficiencies built into your home, or that you are adding to your home. Therefore, you have the opportunity to finance cost-effective energy efficient measures as a part of a single mortgage and stretch your debt to income qualifying ratios on your loan, allowing you to qualify for a larger loan and a better, more energy efficient home. For you and your family, that equals energy savings, less pollution in your community, and a higher overall standard of living…for the same budget dollars, every month of every year. Why wouldn’t you consider an EEM or EIM?