Energy Efficient Mortgages, A Smart Choice for Homeowners?

     We recently learned about a relatively new concept in home mortgages focused on energy efficiency, the Energy Efficiency Mortgage or (EEM).  Such mortgages offer homeowners looking at buying new homes and some cases rehabs additional financing choices beyond conventional mortgages.  Energy efficiency mortgages recognize the value of a home's energy efficiency performance in the actual mortgage.  For savvy eco-conscious and green consumers considering both purchase price and long term operational costs of owning and maintaining a home with this kind of loan might be worth learning more about.
     For us, great residential design is about designing beautiful homes which resonate with a family's values, hopes, dreams and required functions.  It also encompasses integrating energy efficiency and renewable energy options into the process where feasible, financially and practical with a longer term vision in mind.  
     Given today's record high prices at the pump and an unclear energy cost future such thinking is extremely practical and possible.  Who wouldn't want more predictability in energy costs from year to year rather than facing uncertainty with the onset of every Winter? With the addition of Energy Efficient Mortgages into the mix perhaps this will help further mainstream adoption of such practices.
     These loans "give borrowers the opportunity to finance cost-effective, energy saving measures as part of a single mortgage and stretch debt-to-income qualifying rations on loans thereby allowing borrowers to qualify for a larger loan amount and a better, more energy efficient home." (Energy Star - Energy Efficient Mortgages) In short these loans give potential homeowners greater buying power and leverage in improving a home's performance.
     EEM programs are available through Energy Star lending partners, HUD's FHA and the Department of Veteran's Affairs.  The FHA program also has the Rehab option of doing an EEM through it's 203(k) rehab mortgage insurance program. The program requires compliance with mandatory energy conservation standards upgrading the homes thermal efficiency through added insulation, weatherstripping, air-sealing openings as well new HVAC systems meeting certain criteria.  The required criteria date from 1992 or before so the bar isn't very high performance wise.  Along with the other programs, Fannie Mae and Freddie Mac also offer energy efficient mortgages.
     We contacted a few EcoBroker certified Realtors certified in Vermont to see if they'd heard of this program and had any success with it. I spoke with Andy Cochran an EcoBroker and broker manager from Lang, McLaugry, Spera in South Burlingtion.  He hadn't yet heard of it.
     We spoke with Theresa Merelman of Stowe Realty, a Green certified broker in Stowe through the National Associate of Realtors.  She also hadn't yet heard of any EEM loans happening but was hopeful with the steady but slow recovery buyers might find the program helpful.  (Note the link to goes to Theresa's Green Resource page...It's pretty helpful).
    Efficiency Vermont, which doesn't have information about EEM loans on its website does have a great part of its site devoted to helping Vermonter's Building or Buying a Home.  The site gives an overview of the value of considering building or buying Energy Star homes, information about the Vermont Energy Star and Energy Code Plus programs it runs.
    We  have a few calls into some other Vermont realtors and brokers to find out if they've heard of the EEM program or others like it.  We'll add more information to this post when it becomes available.  Our goal is provide helpful information to homeowners considering buying, building or adding on to new homes or renovating existing ones, especially if they're thinking about energy efficiency and conservation measures.
     Remember, next time your thinking of doing a mortgage, ask your broker about an Energy Efficient Mortgage and don't forget to check out Efficiency Vermont's Residential side of its website for the latest information about incentives, weatherization programs, qualified contractors.