FHA Energy Efficient Loan Program

Are you taking into consideration refinancing your loan to a FHA energy efficient mortgage? Here we are going to break down the FHA Energy Efficient Loan Program detailing the thought behind such a program which will contain your new principal and interest expense as well as the additional expenditure of the energy improvements. Yet this new mortgage payment must me lower than the existing principal and interest payment on your current mortgage including reduction streamline refinance. Now there are no cash-out streamline refinance options available without an appraisal. The original principal balance substitutes for an appraised value. When it comes to a HUD REO you can do this without an appraisal and the sales price is used let’s see some of the guidelines for an FHA Energy Efficient Loan Program

FHA Energy Efficient Loan Program Guidelines:

Here are some of the program guidelines such as having to have 5% of the purchase price or in the event you are refinancing 5% of the appraisal cost.

Now there are 100% financing of what is deemed “cost effective” eligible energy improvements. In the event to this you also have to have no additional liens on the residence. The whole of the energy improvements is to be layered into the base loan total. Though loan limits may exceed the total cost of the energy improvements in certain situations.

FHA Energy Efficient Mortgage Underwriting and Qualifying a Borrower:

So how does this FHA Energy Efficient Loan Program work inconjuction with the typical FHA programs? This class of mortgage is at first underwritten as if the energy package does not exist. The borrower also does not require to “income-qualify” or make available additional down payment for the energy improvement financing. For the appraisal there is no need to get a second one. The installment of the energy package also will not need to be fulfilled prior to insuring. Up front Mortgage Insurance is based on the loan sum plus the FHA Energy Effecient Mortgage.

Is the FHA Energy Efficient Mortgage Cost Effective?:

When it comes to Cost Effective it means the energy savings must be larger than the increase of the payment. Now cost effective has to be calculated and based on a state or nationally approved Certififed HERS Energy Rating.

HERS ENERGY AUDIT (RATING):

I want to promptly point out here that HUD requires Certified Energy Rating is usuall a Buyer Cost. Payment prearrangments “must be made” with the rater before HERS rating is even prearranged. So the first thing is that you can pay at the time of Rating the second is is that it can be paid in escrow as a closing cost or finally can be made part of the EEM total. So getting the HERS Energy Audit should be a breeze when getting involved in the FHA Energy Efficient Loan Program.

Weatherization Iteams: FHA Energy Efficient Loan Program Financing Additional Energy Improvements:

When the maximum permitted under the FHA Energy Efficient Mortgage does not cover the cost of the entire energy package, additional funds may be obtained by utilizing the Weatherization Program For existing properties, energy-related weatherization items may be combined with the FHA Energy Efficient Mortgage HUD Handbook 4155.1, Rev 5,1-7(C)(2)

INSTALLED AFTER THE CLOSE OF ESCROW:

The FHA energy efficient mortgages funds are held in an Escrow Holding Account in anticipation of all energy improvements have been fully installed. The home is re-inspected by the Rater or Appraiser, a Notice of Completion is issued and the Contractors are compensated from the Escrow Holding Account.

FHA Energy Efficient Loan Program Potential Energy Improvements:

Following is a catalog of improvements that may be added to an FHA Energy Effecient Loan Program, providing the calculations find them “cost effective”. Actual improvements cannot be recognized until an energy audit (rating) has been performed on the home by a certified HERS (Home Energy Rating System) provider. Only then depending on the existing condition of the home can the actual improvements be identified.

The following is not a absolute list, but one that will provide you with a improved understanding of the potential possibilities the FHA energy efficient mortgage has to improve the comfort, worth and cut the operating expense of a residence.

• Central Heating/Cooling (addition or replacement)

• Dual Pane Low E Windows & Sliding Glass Door

• Replace Wall Heating Unit(s)

• Exterior Doors

• Test & Seal or Replace Ductwork for Leaks

• Attic & Wall Insulation

• House Leakage Diagnostic Test & Seal

• Water Heater Replacement

So if you are at all concerned in an energy efficient mortgages, please feel free to contact us now as being approved for a loan is the best way to lock up your financing if you are buying or refinancing. If you think you might want to get more information about our FHA Energy Efficient Loan Program or Apply for an FHA Energy Efficient Loan then Contact Us.