What is an “Energy Efficient Mortgage”?

I’m in the process of planning some extensive renovations to my 100+ year old brick Victorian townhome.  Over the years, as a real estate broker, I have assisted many architects, developers, and regular homeowners in identifying financing for this process. Although I have several contacts for renovation loans for both commercial and residential projects, as I am exploring options I am finding that there are not many lenders who are currently familiar with an interesting product called the FHA Energy Efficient Mortgage or “EEM”.

I recently met with Kofi Ofori, who is a loan officer for Envoy Mortgage.  I found Envoy and Kofi directly through HUD’s website as a qualified lender for this loan program.  Kofi answered a lot of questions that I had about this mortgage option.

One aspect that I find interesting about the EEM is that rather than being based upon a dollar value that the energy efficient improvements add to the overall value of the property (which they do), the amount loaned is based upon a rating system of how much the improvements will actually save the homeowner over a period of time.  With mortgage interest rates so extremely low right now, this can possibly allow a borrower to very affordably finance improvements that will essentially pay for themselves over time.

Rather than provide additional details here, I’ll refer you directly to Kofi’s Ofori’s blog.