energy star

Benefits of a Green Mortgage

A study published in the Appraisal Journal, in 1999, documented that for every $1 decrease to a home's annual energy costs, the home's value increases $20. For example if you saved $100 per month in energy costs for an annual savings of $1200, your home's value would increase $24k.With the increase over the past 10 years in energy costs, this amount is probably higher.

With an EEM, your estimated monthly savings are applied to your debt to income ratio. The loan officer is allowed to factor the saving into that equation which will either do one of three things:

  • Allow the applicant to qualify for a more expensive home
  • If you have chosen a home at the top of your price range, the effect of the monthly savings on your debt-to-income ratio will make qualifying easier.
  • Fannie Mae estimated an additional 6.5% of individuals would qualify for a EEM mortgage over traditional mortgages because of the added monthly savings.

Once the work has been completed, an energy efficient home is a healthier home, more comfortable home and usually more quiet too.