Green Mortgage Options Expand with FHA Financing- FHA News EEM’s Part 1:

Green Mortgage Options Expand with FHA Financing- FHA News EEM’s Part 1:

14419woman-and-poodle-in-beauty-par.jpgAs the popularity and necessity of FHA financing expands so does the occurrence of multiple bids on houses in the Bay Area. Yes- I did say multiple bids. So what can you do to better your offer you’re presenting to stand out against the 13 bids I just saw in Brentwood, CA. Yes- I said 13 bids.  Better your knowledge of FHA and work with a knowledge lender…me. Use a Green Mortgage- an EEM. Any Energy Efficient Mortgage may just be what your client needs.

 

FHA will allow you to finance between $4,000 and $8,000 in energy efficient upgrades to a property over and above the max LTV and over and above the max FHA loan limit for the area. In addition to that, the borrower will not have to qualify for the extra loan amount to cover this cost. The logic goes that a borrower’s savings in energy costs will offset the extra mortgage cost.

 

How does this work? A Certified Energy Rater prepares a HERS (Home Energy Rating System) report which lists those upgrades and their costs that he/she recommends as cost efficient upgrades. The cost of this report can be financed in the mortgage amount as well. You simply add the cost of the upgrades as determined by the rater to the base loan amount (before you add your UFMIP).  If the home being energy upgraded is an existing house, an escrow account is set up to hold the money for 90 days for the completion of repairs after close of escrow. If the repairs are not done in that time frame the money being held in the account will be immediately applied to principal. If it is new construction, the upgrades will need to be completed prior to close of escrow.

 

The underwriters qualify the borrower on the loan amount before upgrades are added on.

 

Where can you find good HERS raters? Check out the CHEERS (California Home Energy Efficiency Rating Services) website.  These raters will be able to provide HERS ratings reports.

 

Why should you know about this program? Because now that the sharp loan originators have figured out which way the wind is blowing (FHA Lending), creating multiple offers on property you want to continue to be out in front of your compatition.

 

If you are competing for your client on an older home, or any home for that matter, asking the borrower if they are interested in an EEM just may get you the loan.  And, yes I offer EEMs.

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