In recent times, temperatures have been quite chilling and a lot of stress is being laid on energy efficiency. Both these factors have paved way for homeowners to purchase green mortgages. These are aimed at funding home improvements in your home, but they are often characterized by high monthly payments.
The Federal Housing Administration or FHA, Fannie Mae and the Veterans Administration or VA deal in energy efficient mortgages, which have helped many consumers save significant amounts in the long run. People who opt for these mortgages also get to enjoy another advantage, which is an increase in the worth of their homes.
Like any other loan out there, difficulties can incur when you apply for an energy efficient mortgage. The borrowable amounts are often huge and it will be years, before you can save that amount. So are these mortgages really that great an idea as lenders make them out to be? That actually depends on your patient levels and the plans you have for your property.
The main aim of energy efficient mortgages is to provide you with funds for those home improvements that increase your energy efficiency. Products like solar panels, heating systems, ventilation systems, tank less water heaters, and geothermal heating all fall into the category.
When applying for an energy efficient mortgage, the first step is the preparation of an energy rating report. An examiner will evaluate your energy usage and accordingly assign you a score between 0 and 150. This value is known as the Home Energy Rating system index or HERS. The lower this is the higher the energy efficiency of your home. Generally, the average HERS value is around 130. For homes that have been designed recently, this value is reduced to 100. The energy efficiency report also includes recommendations and the amounts you will be able to save by acting on them.
As for the financing, you have three main options to choose from.
Conventional Loans
The maximum amount of a conventional loan that you can get is equal to 10% of your home value. If the lender regards your savings as income, he may be able to offer you greater amounts.
FHA Loans
The maximum amount for this loan is 5% of your home value if it is less than $8,000.
VA Loans
The maximum limit on a VA loan is around $6,000.
Source: www.finance.yahoo.com
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