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An Energy Efficient Mortgage (EEM) Can Give You the Advantage
An Energy Efficient Mortgage (EEM) Can Give You the Advantage
By Chris Reese
An Energy Efficient Mortgage, also known as EEM, can actually give homebuyers the advantage, especially in a multiple offer situation. This is a specialized FHA Loan that allows the borrower to finance up to $8,000 in energy efficient improvements. A homebuyer can add brand new dual pain windows, a new HVAC unit with air ducts, and even insulation all to improve the energy efficiency of the home. So how does this give you or your client and edge in a multiple offer situation? If a home needs improvements in order to qualify for home financing, and EEM can provide those improvements through financing to the homebuyer instead of the seller being required to pay for the repairs by the close of escrow.
If a home on the market has a cracked window or a faulty HVAC unit, a homebuyer can do an Energy Efficient Mortgage FHA loan and finance the cost of new windows, a new HVAC, or both for that matter plus new insulation. That puts your offer to purchase, or your client’s offer to purchase at the top of the pile. This is because all of the other offers on the property were either requesting the repairs be made as a condition of the contract, or the underwriter is requiring the repairs to be made by the seller as a condition to close the loan. If your offer includes the necessary repairs to be included in the homebuyer’s loan, the seller and the agent will be most likely be accepting your offer over the others.
There are many properties that are on the market, most of which are either short sales or bank owned properties. Many of these properties have been neglected. Sometimes squatters and teenagers have used these vacant properties to live in and vandalize. This makes them a great opportunity for potential homebuyers who would like a deal but need to finance the property. They can get a great price on a home that needs energy efficient improvements and use the EEM which allows them to put down the minimum down payment of only 3.5% and still receive a seller concession of up to 6% towards their closing costs. The bottom line is that an FHA Loan known as an Energy Efficient Mortgage is a huge advantage for homebuyers especially when there are multiple offers on the table.
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