Environmentally Conscious Real Estate of Cincinnati

Green lending practices have been slow to make their appearance locally.  If you are considering building an eco-friendly home or doing a green remodel, you will very likely have your work cut out for you in order to find assistance in the mortgage market.  Jami and I have been working with several local lenders who are interested in becoming resources for environmentally conscious homeowners – we’ll keep you posted as this work progresses.  As with other green resources, we are constantly expanding our network and have new information and updates weekly – call anytime to find out the latest.

For now, consider the following in your search for green lending:

Energy Efficient Mortgages

Homes account for nearly 20% the world’s energy comsumption.   We can be proud that Cincinnati was the first city to vote in an aggressive 15-year, 100% tax abatement for LEED-certified homes, but lending institutions are lagging far behind our local government’s enthusiasm for the green revolution.  If you are buying, selling, refinancing, or remodeling a home, you can increase your comfort and save money by using an Energy Efficient Mortgage (EEM) – one can be applied to most home mortgages. This gives the borrower special benefits when purchasing an energy-efficient home or a home that can be made efficient through the installation of energy-saving ugrades.

Funding home energy improvements through an EEM provides the following benefits:

Home Energy Rating and Energy-Efficient Mortgages

One of the keys to getting an energy-efficient mortgage is having a certified home energy rater conduct an energy audit of your home before your financing is approved. HERS (Home Energy Rating System) -certified homes assure the lender that the home is efficient, as well as noting areas that need improvement to save money on monthly energy bills. The cost of these improvements then can be added to the mortgage. Visit the Department of Energy’s Energy Efficient Mortgage Home Owner’s Guide for additional information.  If you would like to know more about local HERS and LEED rating and certification, call us at (513) 260-9632.

Refinancing

If you’re planning to refinance your mortgage with the intention of making enery-saving improvements, consider borrowing more than the amount needed to pay off your existing mortgage, useing the extra money to make energy-efficient upgrades.  There are two obvious benefits to this, interest paid on your home mortgage or equity loan is usually tax deductible and energy-efficient home improvements will immediately lower your monthly energy bills.  Be certain you talk over the new monthly payments with your loan officer so that you are sure it falls well within your budget until the cost-benefit can be realized.

Financing – Goverment Insured

Currently the Department of Housing and Urban Development does not offer EEM’s.   If you qualify for VA, though, read on:

U.S. Department of Veterans Affairs

The U.S. Department of Veterans Affairs (VA) guarantees mortgage loans for veterans with active duty service and qualified reservists. Its EEM can be used to purchase or refinance a home along with the cost of making energy-efficient improvements. To cover the cost of the improvements, the loan amount can be increased:

• Up to $3,000 based solely on documented costs;
• Up to $6,000 if the increase in the mortgage payment is offset by the expected reduction in utility costs;
• More than $6,000 based on a value determination by VA.

A VA refinancing loan may not exceed 90 percent of the home’s appraised value plus the costs of the improvements.

Interested customers should go through the normal home loan application procedure, inquiring the lender about an EEM at the beginning of the process.

Additional information available from
U.S. Department of Veteran’s Affairs
810 Vermont Avenue, N.W.
Washington, DC 20420
1-800-827-1000
http://www.homeloans.va.gov/rlcweb.htm – This webpage lists the regional offices for the U.S. Department of Veteran’s Affairs, ideal for applying for a home loan.

Conventional Lending

At the current time Fannie Mae’s Energy Efficient Mortgage program is under review and not accepting applicants. Interested customers are advised to contact Fannie Mae periodically for updates.

• Additional Information Available from:
  Fannie Mae Resource Center
  Telephone 1-800-7FANNIE (1-800-732-6643)
  www.fanniemae.com

Freddie Mac

• Freddie Mac is a stockholder-owned, congressionally chartered corporation that works to create a continuous flow of funds to mortgage lenders in support of homeownership and rental housing. It purchases mortgages from lenders and packages them into securities that are sold to investors, providing homeowners and renters with lower housing costs and better access to home financing.
• Freddie Mac provides incentives and criteria, as well as flexible guidelines, for EEMs that it’s willing to buy, which encourage lenders to offer them. However, the EEMs are limited to purchasing existing energy-efficient homes or those to be retrofitted or renovated for energy efficiency.
  • Several home energy rating methods and/or documentation, not just a HERS report, are acceptable.
  • Lenders can exceed the standard 2 percent debt-to-income stretch at their own discretion.
  • It allows a broader range of energy-efficient improvements than most EEM programs.
• Additional Information Available from
  Freddie Mac Investor Inquiry
  1551 Park Run Drive, MS D5O
  McLean, VA 22102
  800-373-3343
  Email: investor_inquiry@freddiemac.com

US Energy Efficient Improvements

• Many utilities in the United States offer a range of energy-efficient services to their customers. The Edison Electric Institute (EEI), an Alliance Associate, offers a list of member company programs that offer efficiency services to homeowners, companies, and industrial plants.
• Homeowners will find more energy-efficiency services from utilities on the National Energy Affordability and Accessibility Project (NEAAP) website.

Check back soon for more to come on energy tax credits and rebates available at the local and state level, or call Jami or myself for more information.