While it’s no secret that gas prices have escalated, less has been said about escalating housing costs in the form of high utility bills. If you have wished for a way to reduce monthly energy bills — a new Fannie Mae energy improvement mortgage add-on program may be the answer you’ve been looking for.
Fannie Mae’s new energy improvement feature can be used to make energy improvements to existing homes. For qualified applicants, instead of offering a separate loan/mortgage for energy upgrades or retrofits alone, Fannie Mae’s new program feature allows the upgrade of an existing home through a purchase or re-finance mortgage at current interest rates. It alleviates the need for two separate mortgages/loans. The principal can be repaid with the energy savings generated by the improvements.
It folds the cost of the improvements capped at up to 10 percent of the estimated market value of the home– following the energy efficiency enhancements—into the mortgage amount itself. The new program is available through participating lenders across the country. The program requires an energy audit by a certified Home Energy Rating Systems (HERS) specialist. The audit is to ensure that the proposed energy upgrades are legitimate and truly cost-justifiable.
The features of the new Fannie Mae product are:
The financing of energy improvements found by a RESNET Home Energy Rating to be cost-effective of up to 10% of the as-completed appraisal. This amount is subject to standard Fannie Mae LTV, CLV and HCLTV ratios.
- The cost of the home energy rating can be included as the cost of the energy improvements.
- Appraisers will be responsible to determine the as-completed value of the home based upon the energy improvements that were made.
- Appraisers will also be responsible for verification that the energy improvements being financed were completed.
- Only single family homes qualify.
- Manufactured houses and cooperative units are not eligible.