Energy efficient mortgages (EEMs) serve several purposes depending on the borrowers' needs. As their name suggests, EEMs are compatible with energy-efficient homes. However, borrowers can get an EEM to buy a new home or to refinance to make energy-efficient improvements to a residence. Executing the latter will no doubt save money in the long run by cutting your monthly utility costs. Additionally, homebuyers can increase their homes' marketability with such improvements. Saving money on bills each month triggers a productive cycle where borrowers save money that they can put toward their mortgage. Lenders notice this cyclical effect.
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Besides lowering payments for energy, getting an EEM helps the environment. Either by improving your home or buying an environmentally-friendly one, you'll consume fewer resources to heat and cool your home. Consequently, the carbon footprint of your home shrinks as it will release fewer green house gases into the atmosphere than an average home.
EEM loans are available to the general public, but veterans can combine their VA Home Loan benefits with an EEM. When veterans use the two together, they're likely to get negotiable interest rates. Even better, qualified veterans can finance a home with a VA loan and EEM for no money down. Qualifying terms for VA loans are far less restrictive than conventional loans'. Borrowers' credit for VA loans does not need to be impeccable, and income requirements are not as high.
If borrowers already have a mortgage, fixed or adjustable rate, they can combine it with a VA loan. No matter what the appraised value of your home is, $6,000 is the maximum borrowing amount for home improvements. The Federal Housing Administration insures EEMs, which means lenders assume less risk. In doing so, lenders are more willing to negotiate interest rates.
Though it may be easy to find lenders who offer EEMs, it's more tasking to find those who offer VA EEM loans. To issue such loans, a lender must participate in the VA Home Loan program. VA-approved lenders help borrowers finish the paperwork that qualifies them for the program. Only after qualifying for a VA loan can borrowers work with their lender to explore a VA EEM as suitable option.
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