Homeowners purchasing homes built with structural insulated panels (SIPs) may qualify for an Energy Efficient Mortgage (EEM). These special mortgages allow debt to income ratios to be stretched when purchasing an energy efficient home.
Next to the mortgage payment, utility bills are one of the largest costs of owning a home, and as energy prices continue to rise utility costs will become more burdensome to homeowners. A high performance SIP home can save so much money in heating and cooling bills that lenders are willing to give energy efficient homeowners a larger loan. Buying a SIP home will not only enable you to buy a more expensive home, but you will be in positive cash flow from day one.
HOW ENERGY EFFICIENT MORTGAGES WORK
Even with a high monthly mortgage payment, an energy efficient SIP home will save you money every month. Lenders are willing to “stretch” debt to income qualifying ratios up to 2% for homeowners purchasing energy efficient homes, meaning homeowners can borrow more on the same amount of income.
|
Non Energy Efficient Home |
SIP Home |
Purchase Price |
$250,000 |
$253,000 |
Down Payment |
$50,000 |
$50,600 |
Loan Payment |
$200,000 |
$202,400 |
Interest |
5.50% |
5.50% |
Monthly Payment |
$1,136 |
$1,149 |
Average Monthly Payment |
$150 |
$60 |
Total Expenses |
$1,289 |
$1,209 |
Monthly Savings |
$0 |
$77 |
Even with higher monthly mortgage payments, the owner of the SIP home saves money every month.
HOW TO GET AN ENERGY EFFICIENT MORTGAGE
To qualify for an Energy Efficient Mortgage, the home being purchased must be tested for projected energy usage. The measurement of the amount of energy a home uses is called the Home Energy Rating System Index, or HERS index. A HERS index is also used to determine whether a home meets ENERGY STAR standards or qualifies for tax credits under the Energy Policy act of 2005, however, homes do not have to qualify for these programs to be eligible for Energy Efficient Mortgages.
A HERS rating costs between $400 and $600. The cost of the rating could be paid for by the builder, lender, or real estate agent. Sometimes the cost of a HERS rating can be financed as part of the mortgage. The fee for a HERS rating is small compared to the amount of money an energy efficient home will save in utility costs.
WHERE CAN I FIND OUT MORE ABOUT ENERGY EFFICIENT MORTGAGES
Energy Efficient Mortgages are federally recognized and available through most lenders, including Fannie Mae and Freddie Mac. The Federal Housing Administration offers EEMs, as well as the Department of Veterans Affairs, and recently the USDA’s Rural Development program.
To find out more on Energy Efficient Mortgages
visit the FSIC website. or ENERGY STAR |
