How an Energy Efficient Mortgage can Pay for your Geothermal System:
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How an Energy Effcient Mortgage
Can Pay for Your Geothermal System Without
Increasing Your Monthly Payments
So What Exactly is an Energy Efficient Mortgage Anyway?
An Energy Efficient Mortgage, also called an EEM, increases the purchasing power of buying a geothermal
system by allowing the lender to increase the borrowers income by a dollar amount equal to your
estimated energy savings. A Fannie Mae loan also adjusts the homes value to reflect the added value of a
geothermal system.
As an example, let's suppose your are building or renovating a home valued at $350,000. Let's also assume
that your new geothermal heating and cooling system will cost about $17,500 more then a conventional
gas furnace with standard air conditioning. In our example you might expect your monthly average
heating, cooling and hot water costs to be about $300. With a modern geothermal system those same heating
cooling and hot water costs might be only $100/month. Thats a savings of around $200/month.
If you borrowed the additional $17,500 to purchase the geothermal system on a 30 year fixed rate EEM
with 6% interest, your monthly principal and interest payment would increase by $105. Since, in this example,
your monthly savings is documented at around $200 and your additional monthly mortgage expense
is only $105, the lender will be more then happy to lend you the money to pay for your geothermal
system. And you will save $95 every month (and even more as energy costs rise over the years).
In addition, if your new home incorporated upgraded insulation, windows and lighting you would be entitled
to an estimated Federal Tax Credit of around $800.
Remember, this is only an example. You should contact a qualified green mortgage (EEM) loan expert to
help you with your EEM. Likewise, you should consult your tax planer with questions about Federal Tax
Credits. And of course you should contact Mega Air, Inc. for an estimate of the expected energy
savings for your particular building.
EEM Fast Facts
_ EEM's use your monthly energy savings to increase both the value of your home and the
loan amount you qualify for. This allows you to pay for your geothermal system without
increasing your total monthly outlay.
_ Other energy saving upgrades such as insulation, windows and lighting can also be used as
part of an EEA affordability analysis.
_ The lender will require your energy upgrades to be documented by a certified HERS inspector.
Ask your loan officer if you will be required to pay for this inspection.
_ EEM's can be used for new construction or renovating an older home.
_ EEM's can be conventional (30 or 15 year fixed), FHA or VA.
_ Ask us to recommend an EEM mortgage professional for you.