Archive → May 28th, 2010
Let’s Talk About EEM’s – Be Green!
EEM’s or Energy Efficient Mortgage is a product that has been around for some time but is not widely used or understood. This is a way for someone purchasing an older home or a rough REO to improve features of the home at a very low cost. The program allows for borrowers to finance energy efficient improvements to the home as part of the first mortgage and the additional amount financed are NOT factored into the LTV or the DTI calculations. With an EEM, you can finance up to the greater of $4,000 or 5% of the property’s value not to exceed a total of $8,000. This allows for the purchase and installation of energy efficient appliances, weather stripping and dual pane windows to lessen the homes green footprint.
So why is this program not more popular? Because:
- Not many Originators and/or lenders know about it of understand the product.
- Since they do not understand it – they don’t tell anyone about it!
Imagine purchasing a 30 year old home and all of the kitchen appliances are run down and out dated. Apply for and get approved on your standard convention or FHA loan, add the cost of the new appliances on to the loan amount, and post close have a completely updated kitchen. The cost is financed into your first mortgage at the same rate and the interest is now fully tax deductible. Not a bad option and one that more home buyers would take advantage of “if” they knew it existed.
We do know it exists and we wnat YOU to know it exists so we can continue to offer solutions and incentives to home buyers. The EEM can be used in conjunction with conventional and FHA financing and we have even successfully paired it with VA financing asa well! If you are interested in finding out more abouty this product then please comment on this post and I will follow up with additional information on the program.
Lastly, remember that LQI (Loan Quality Initiative) is coming June 1 and may have a profound impact on transactions going forward. For a refresher on the program and a little entertainment you can click on this LINK to view a video synopsis of what is coming down the pike!
Have a great Memorial Day Weekend!!