What Are Green Mortgages And How Can I Take Out One?
Green mortgages, also known as energy efficient mortgages aim at reducing the impact on the environment. There are few lenders that are clubbing energy efficient terms to their mortgages to reduce global warming. In this regard, the HUD or U.S. Department of Housing and Urban Development is working in tandem with lenders so that consumers buy homes that save energy or get energy efficient features incorporated into their existing houses. The green mortgages have been made quite affordable.
The EEM or Energy Efficient Mortgages work in the same manner as the traditional mortgages except that the green mortgages have additional qualifications that need to be met if you are intending to take out one.
What are the qualifications required for taking out green mortgage?
In order to qualify for a green or energy efficient mortgage, your home is rated by Home Energy Rating System and the findings of the same are documented in what is referred to as Home Energy Rating System report. A rating is assigned to your home and you get a rating that is between 1 and 100. The rating is done on the basis of the following factors –
- Appliances
- Climate
- Windows
- Insulation
- Utility rates
In case you get a score that is low, it indicates that your home is not energy efficient and needs improvement in terms of energy efficiency. On the other hand a higher score indicates that your home is energy efficient.
If it is found that by making the necessary changes to your existing home, you will be saving some cash; the lender will go ahead and approve your green mortgage.
Types of EEM or Energy Efficient Mortgages
There are 3 types of green mortgages you can choose from. They are as follows –
1. The Veteran’s Administration EEM
The VA EEM is extended to members of the military who are found eligible for the loan. The amount that is extended to buyers for improvement under this program ranges between USD$3000 and USD$6000.
2. The Conventional EEM
The “projected energy savings” in dollar amount that is obtained after calculation gets added to the amount of the mortgage.
3. The Federal Housing Administration or FHA EEM
The FHA EEM allows prospective home buyers to add up to a maximum of 5% of the home’s value that is approximately USD$8,000(maximum) to the mortgage amount.
The green mortgages give a boost to your buying potential and simultaneously allows you to save on energy and cash. Green mortgages may cause you to pay a little more each month. Nevertheless, you will be saving considerable amount on your energy and utility bills that will inevitably benefit you in the long run.