Are you considering refinancing your loan to a FHA Energy Efficient Mortgage? The idea behind such a program with comprise your new principal and interest payment as well as the added expenditure of the energy improvements. Yet this new mortgage payment must me lower than the current principal and interest payment on your present mortgage including reduction streamline refinance. Now there are no cash-out streamline refinance options available without an appraisal. The original principal balance substitutes for an appraised value. When it comes to a HUD REO you can do this without an appraisal and the sales price is used.
Here are some of the program guidelines such as having to have 5% of the purchase price or in the event you are refinancing 5% of the appraisal cost.
Now there are 100% financing of what is deemed "cost effective" eligible energy improvements. In the event to this you also have to have no supplementary liens on the house. The whole of the energy improvements is to be layered into the base loan total. However loan limits may exceed the total cost of the energy improvements in certain situations.
UNDERWRITING & QUALIFYING BORROWER:
So how does this plan work inconjuction with the normal FHA programs? This type of mortgage is at first underwritten as if the energy package does not exist. The borrower also does not require to "income-qualify" or make available additional down payment for the energy improvement financing. For the appraisal there is no need to get a subsequent one. The installment of the energy package also does not need to be concluded prior to insuring. Up front Mortgage Insurance is based on the loan sum plus the Energy Effecient Mortgage.
When it comes to Cost Effective it means the energy savings must be larger than the increase of the payment. Now cost effective has to be calculated and dependent on a state or nationally approved Certififed HERS Energy Rating.
HERS ENERGY AUDIT (RATING):
I want to quickly point out here that HUD requires Certified Energy Rating is usuall a Buyer Cost. Payment prearrangments "must be made" with the rater before HERS rating is even ordered. So the first thing is that you can pay at the time of Rating the second is is that it can be paid in escrow as a closing cost or finally can be made part of the EEM total.
WEATHERIZATION ITEMS: FINANCING ADDITIONAL ENERGY IMPROVEMENTS:
When the greatest permitted under the Energy Efficient Mortgage does not cover the cost of the entire energy package, additional funds may be provided by utilizing the Weatherization Program For existing properties, energy-related weatherization items may be pooled with the Energy Efficient Mortgage HUD Handbook 4155.1, Rev 5,1-7(C)(2)
INSTALLED AFTER THE CLOSE OF ESCROW:
The enery efficient mortgage program
funds are held in an Escrow Holding Account until all energy improvements have been entirely installed. The home is re-inspected by the Rater or Appraiser, a Notice of Completion is issued and the Contractors are compensated from the Escrow Holding Account.
POTENTIAL ENERGY IMPROVEMENTS:
Following is a catalog of improvements that may be added to an enery efficient mortgage program, providing the calculations find them "cost effective". Actual upgrades cannot be determined until an energy audit (rating) has been executed on the home by a certified HERS (Home Energy Rating System) provider. Only then depending on the existing condition of the residence can the actual improvements be determined.
The following is not a inclusive list, but one that will provide you with a improved understanding of the potential opportunities the energy efficient mortgages has to improve the comfort, value and trim down the operating expense of a residence.
• Central Heating/Cooling (addition or replacement)
• Dual Pane Low E Windows & Sliding Glass Door
• Replace Wall Heating Unit(s)
• Exterior Doors
• Test & Seal or Replace Ductwork for Leaks
• Attic & Wall Insulation
• House Leakage Diagnostic Test & Seal
• Water Heater Replacement
So if you are at all fascinated in an enery efficient mortgage program, please feel free to contact us now as being approved for a loan is the greatest way to secure your financing no matter if you are buying or refinancing.