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Qualify for A Larger Home Loan With An Energy Efficient Mortgage

Mar 6, 2008
Energy efficient mortgages are available to those who wish to purchase a home that is considered to be energy efficient, or those who want to make energy efficient improvements to the home they are currently living in. In the United States, there are three different types of mortgages that are classed as being for purchase or making improvements to a home to make it more energy efficient.

There is the conventional EEM (Energy Efficient Mortgage), the FHA EEM or the VA EEM. Below we take a look at just what these different types of mortgages are and who is able to utilize them.

Conventional EEM - This can be used by anyone and the amount that one borrows will depend on how energy efficient the home or the improvements made are considered to be. The costs of the energy efficient components of the home are directly transferred to the bottom line valuation of the home during the appraisal process.

FHA Energy Efficient Mortgage - With this one, a lender is able to lend a person up to 100% of the costs of making energy efficient improvements to a home. The maximum amount that you can borrow on such as loan is $8,000, but you do not need to make any additional down payment. These are also known as energy star mortgages as they can be used on those properties that are classified as energy star qualified.

VA Energy Efficient Mortgage - This particular type of mortgage is available to personnel currently serving as a member of the military. Military personnel can apply for these loans when they wish to make energy efficient improvements to a property that they own currently. At present, a person is able to borrow between $3,000 and $6,000 in order to make the necessary improvements to their home to make it more energy efficient.

There are numerous benefits to be gained from one taking out such mortgages or loans and below we look at a couple of these. As well as helping you to save on the costs of your utility bills each month, making such improvements to your home can actually increase its resale value as well.

A person is able to borrow a larger sum of money as the lender will look at the estimated savings to be gained as a result of lower monthly utility bills and an take this into account when factoring in the amount of monthly payment that the homeowners can afford. This means that the more energy efficient the property is, the more you can borrow.

You will find that with an energy efficient mortgage you can actually include the costs of any improvements that you wish to make to the property in to the total amount that you wish to borrow. This means that you can pay for all the improvements as long as they are valued at around 15% of the total value of the property and then can be repaid over the lifetime of the loan.
About the Author
An Energy Efficient Mortgage , also known as an EEM, can be an important resource when seeking to construct a green, energy efficient home. John Wyeth writes informative articles for homegreenhome.info - a blog about building, financing, powering and living in your green home .
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