That article is about Energy Efficient Mortgage Loan Refinancing. While the government would prefer all residents to operate energy efficient homes due to the increased yearly savings in household expenditures, lenders too, find the programs (EEM) appealing because the more home owners save on utilities, the more disposable income they have available to spend on their mortgages. In fact, the energy efficiency adds to the value of the home as it is more appealing when being sold. The fact that it saves money is quite attractive to buyers.
To qualify for energy efficient mortgage loan refinancing programs, most lenders will require an “energy rating”. A certified professional will be sent to inspect the home, and a rating will be determined based upon a national or state approved home energy rating system (HERS).
Basically, the professional will inspect the home with particular attention to those features of the home that make it efficient or deficient depending on the case. For example, does the home have adequate insulation; are the windows drafty; how is it heated and cooled; and how much air leaks out? Leakage is important because there is no point in paying for gas in the winter to heat a home, or hydro in the summer for air conditioners if everything is just seeping out the windows, walls and doors.
The actual rating also takes into account the area’s climate and the cost of utilities in your specific region. Once the inspection is completed, a report will be provided with actual dollar figures of costs and potential savings. It will also list the recommended upgrades, and the new rating that would be in effect when the upgrades are completed.
In order to do the home loan refinance, the projected savings must be greater than the amount you would need to borrow to fix the problem. So if the home owner is in the process of refinancing, the lender might add the costs associated with energy efficiency to the mortgage. Even borrowers with homes that are already energy efficient can benefit from energy efficient mortgage loan refinancing because the lender can use a modified or more liberal debt-to-income ratio.
Energy efficient mortgage loan refinancing can be done through a government-insured program or conventional loan. You might contact your state government first to see what programs they have available. Otherwise, contact your lender to inquire how you might qualify.
One important point of which you should be aware is that this is not money or cash in your hand. Once the amount for the actual upgrades are determined, and the energy efficient mortgage loan refinancing is in place, the lender places the funds for the upgrades into escrow. This ensures that the work is done and the money is there to pay for repairs. And while it is true that your mortgage payments might increase when refinanced, it should be offset by the savings in utility payments.
If you would like to refinance, and think that energy efficient mortgage loan refinancing can help you, it is really important to calculate all the figures first. Compare your existing mortgage along with the energy costs to the prospective mortgage along with the proposed energy costs to ensure you see a savings or at least can break even.