Energy Efficient Mortgages and Improvements

There are 3 programs available from the FHA that homebuyers can take advantage of when purchasing a new or existing home. These programs can be particularly useful when purchasing a Bank Owned or REO property.

1. The Energy Efficient Mortgage
2. The FHA Weatherization Program
3. The FHA Streamline Limited Repair Program

The Energy Efficient Mortgage, or EEM, will allow you to finance an additional 5% of the purchase price of your new home up to $8000.00 for Approved Energy Improvements. The EEM can also be used in conjunction with the FHA Weatherization program. Both programs do require that the subject property and improvements be analyzed for cost effectiveness over the expected life of the improvement by a qualified home energy rating system (HERS) energy rater. The FHA will also finance up to $200 of the cost of the audit.

The following are a list of improvements that qualify under the FHA EEM program.

1. Replacement of Floor or Wall Heaters
2. Install or replacement of Central Heating or Cooling
3. Ductwork Testing and Sealing for Leaks
4. Whole House Fans
5. Dual Pane Low E Windows or Doors
6. Solar Water Heaters
7. Exterior Doors

 List of eligible repairs under the weatherization program:

1. Attic/Wall Insulation
2. Insulation Blanket for Water Heaters
3. Thermostats
4. Insulation of Ducts & Pipes
5. Caulking and Weather Stripping
6. Dual Pane Windows,Storm Windows and Doors

The FHA Streamline Limited Repair Program can be used in conjunction with the EEM mortgage to provide up to $35,000 for qualified repairs. Under the program the home buyer would collect bids from Licensed, Insured and Bonded Contractors.

A written bid or proposal is required from each contractor and must include Labor, Materials, Services and required permits. Contractors must agree not to charge more then the proposed price and all money is distributed at closing via escrow.

Eligible repairs under this program are:

1. Almost any discretionary-non-structural repairs, renovations and weatherization
2. Repair Pest or Dry Rot
3. Replace Floor Coverings
4. Repair Decks and Patios
5. Minor Remodeling, such as kitchens
6. Dual Pane Windows
7. Replace or Repair Roof, Gutters & Downspouts
8. Septic or Well Repair or Replacement
9. Improvements for persons with Disabilities
10. Heating or Cooling
11. Appliances: Washer, Dryer, Refrigerator, Stove, Microwave

If you have any questions or would like to speak with a lender that understands how to take advantage of these programs, fill out the contact form here . Please indicate on the form whether you are a Realtor or a Home Buyer.

10 Common Problems

1. Incandescent lights - Some countries are actually outlawing them. Consider retrofitting with Compact Fluorescent. Write the installation date on the base with a permanent marker. Manufacturers are happy to replace them should they fail before their life expectancy. They might even send you 2

2. The refrigerator that you inherited from your parents - Old refrigerators never die they just retire to the garage to keep 1 six pack of beer. Consider upgrading to an Energy Star refrigerator and save up to 50% of the power consumption of that old beast.

3. A leaky drafty house - Leaks and openings to the outdoors from your building envelope are robbing you are your comfort and your hard earned cash. If you live in an 800 sq foot house and your utility bills are over $250 per month, you aren’t living in a home, you are camping out. A modest investment in spray foam and blown cellulose insulation will make you snug as a bug. And if bugs are a concern in your home I suggest that you purchase the Borate treated cellulose. Borate, Boric Acid is the same stuff that is in Borax. It’s fairly benign to humans but deadly to vermin.

4. Leaky ductwork - For some reason ductwork is never installed properly. There is a very good chance that your ducts are closely related to Swiss cheese. Leaky, improperly sized ducts are responsible for murdering many a compressor and disrespecting your pocketbook. Leaks cause your compressor to work overtime trying to keep up with a heating or cooling load that never gets satisfied. Most ductwork is undersized which is hard on the blower section of your furnace or air-handler.

5. The “They don’t make em like this anymore furnace” - There is a good reason they don’t make it anymore. A typical standing pilot furnace delivers 60% of its heating capacity to your home and donates a generous 40% of its heat to “Global Warming”, Literally. Today’s furnaces can deliver 90-96% efficiencies and they are much safer than the technologies of the past. However, Before you replace your furnace you need to determine whether or not it is operating properly. Your furnace and air conditioning system should each be serviced every year. If it is in good working order your money may be better spent insulating and sealing your home and your ductwork.