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The benefits of energy efficient homes, such as lower utility costs, increased home comfort and higher resale values are already making an impact with American homeowners and buyers. And the best way to finance the purchase of an energy efficient home, or energy-saving retrofits to an existing home, is through an energy mortgage.

There are basically 2 types of energy mortgages, energy efficient mortgages (EEMs) and energy improvement mortgages (EIMs). Both are designed to help make the option of living in an energy efficient home more affordable. There are some key energy mortgage benefits that you won’t find with a standard mortgage, such as:

Greater Purchasing Power

EEMs allow homebuyers to finance and include cost effective energy saving measures as part of their mortgage. By stretching debt-to-income ratios on loans, they enable borrowers to qualify for larger loan amounts and better, more energy efficient homes.

Affordable Energy Efficient Upgrades to Existing Homes

EIMs include the costs of energy efficiency improvements in the mortgage, so borrowers aren’t faced with the prospect of a larger down payment. Money that is saved in utility bills can then be used towards financing energy improvements.

Increased Home Value

study conducted by the Earth Advantage Institute, a non-profit group based in Portland, Oregon, “found that newly constructed homes with third-party certifications for sustainability and energy efficiency sold for 8% more on average than non-certified homes in the six-county Portland metropolitan area. Existing houses with certifications sold for 30% more.”

Most lenders offer energy mortgages, so if you’re interested in getting one, talk to your financial institution about options available to you. The Federal Housing Administration (FHA) also offers EEMs to consumers. You can contact a FHA approved lender to apply for a FHA insured EEM. Veterans can contact their local VA Regional Loan Center for information on VA EEMs.

ENERGY STAR Mortgage Program Benefits

ENERGY STAR mortgages are similar to EEMs, and offer borrowers the possibility of financing energy-saving improvements to their homes without paying more than they would for a typical mortgage. Other benefits include:

Discounted Mortgage Rates

Participating lenders can offer borrowers lower mortgage rates than what they would normally get if applying for a standard home loan.

Reduced Loan Fees

Approved borrowers can also benefit from lower fees with an ENERGY STAR mortgage.

Assistance with Closing Costs

Another plus point to an ENERGY STAR mortgage is that participating lenders may also provide an added financial benefit to borrowers in the form of closing cost discounts.