I'm sorry for inundating all of you with this information, but I learned some really interesting things in regards to the energy efficient mortgages. I'll keep you posted as I learn more. I have also gotten a lot of inquiries as to what improvements can be made. I have included a list at the bottom. On making these types of improvements on your home not only can you expect to save $1800-$3000 on your utilities each year, but each home that goes through this program will save our air from about 3 Tons of CO2 emmissions a year.
Under conventional financing, the borrower cover 100% of the cost of energy efficient improvements as long as it does not exceed 15% of the value of their home. This works on purchases or refinances of an existing home. The 15% is also added dollar for dollar onto the appraised value of the home. You can expect to save about 50% off your current utilities if you haven't already made some improvements. After the improvements are made you can also expect your home to save our air from 3 tons of CO2 emmissions a year. Under conventional financing, any program qualifies. You can even use the EEM in conjunction with an adjustable rate mortage if you like. If you are doing an EEM, there is also the option to not have any PMI (private mortgage insurance) added into your payment if you are above the 80% loan to value of your home. This mortgage program usually gives the owner a 200-400% rate of return on improvements made. Funds for improvements made are placed in an escrow account while the work is being done.
There is also a HUD 203K program which targets homes that need to be rehabilitated. While intensive, this is a great program for those of you who want to make the improvements for a home that needs some work. For example, you are purchasing a home in the $60,000 range, if improvements were to be made, (new kitchen, bathroom remodel, new roof, structural improvements, siding, new windows, plumbing etc.) the home would be worth $100,000. If you wanted to add solar power to your home, the 203K program allows you to finance 20% of the expected value of the home ($20,000) to cover 100% of solar power improvements. Like the program above, energy efficient improvements raise the appraised value of the home, dollar for dollar for all the energy efficient improvements made. You now have a new home that's energy efficient. This is also an ideal program to target a rundown area of a city that may have classic homes.
Under the FHA program, you can finance 100% of the cost of energy efficient improvements up to 5% of the value of the home. These can be used on either purchases or refinances and the costs are rolled right into your single mortgage. I've mentioned this before, but FHA mortgages are assumable by prospective buyers. So if you're thinking about selling your home, as long as the buyer puts in the equity that you've put in, they can assume your mortgage. While this program doesn't finance as much in terms of actual dollar amount, the assumability is a great selling point that is often forgotten. The FHA program has no income limits, but does have limits on the maximum loan amount. This program is great for first time buyers who don't have a lot of money to invest in a home or people who want to take advantage of the assumability clause.
Most if not all of the improvements below are covered by the financing options above.
- Insulation includes all of the following: Attic, Roof, Ceiling, Exterior Walls, Floors, Slab/perimiter, Foundation walls, Insulated water heater or insulation wrap, insulated heat/cooling ducts or pipes
- Windows and doors improvements include: double or triple glazed windows, insulated doors, weather stripping, caulking or other
- Heating and cooling improvments include: automatic thermostats, automatic flue dampers, energy-efficient furnaces, energy-efficient air conditioners, energy-efficient heat pumps, energy-efficient hot water heaters, special fireplace devices/features, wood burning stoves, outside combustion air or fireplace, or woodstoves
- Solar equipment or design includes the following: passive solar design/landscaping for the exterior, passive solar design for the interior, solar space heating and cooling, backup heating and cooling systems, solar electric panes, solar hot water heating and earth-sheltered housing design
I look forward to helping people with this program. I truly believe in the good that it can do and set a goal to personally save the environment 300 tons of CO2 emmissions. That's 100 homes.
You can reach me in Lansing on my toll free number, 877-867-7095 or locally at 517-483-5121. I'm learning more and more that there are no mortgage companies that really understand the requirements needed to get these loans to a closing table, I'm willing work with individuals statewide and in the other states we serve. My company is authorized to do business in Michigan, Illinois, Indiana, Florida and Mississippi. If there are other places that you think this news should go to, feel free to let me know or forward the information on. I appreciate all the nice responses I've gotten.
Saving the enviroment, one home at a time.
Indigo Financial Group
2216 E. Michigan Ave., Suite 103
Lansing, MI 48912
517-483-5121, toll free, 877-867-7095