Save Energy, Save Money

Want to qualify for a higher loan amount to fund energy improvements in order to bring down overall living expenses? Talk to the federal government. Its time to consider FHA’s Energy Efficient Mortgage (EEM) Program if you are remodeling your home.Rising energy prices are pinching everybody and taking the cost of living up and away. Reduce your energy and utility bills by remodeling your house, like replacing leaky pipes and making windows more energy efficient. Making such an investment is easier than you think with the assistance of the Federal Government.

What is EEM or Energy Efficient Mortgage?

Fund energy efficient improvements in all aspect of your home with Energy Efficient Mortgage also known as EEM in short. There are multiple ways of doing this with varying qualification terms. If you choose federal backing, the improvements can be insured by the Federal Housing Authority (FHA). Alternately, approach the Veterans Administration (VA).  These improvements could be made using the EPA (Environmental Protection Agency) program called ENERGY STAR or other standard channels.

Qualifying for EEM

Installing energy efficient windows, making the heating and air conditioning system efficient, upgrading water heating system to more efficient ones, upgrading the ducting systems to prevent energy leaks are few of the standard improvements that lead to substantial cost saving in the long run.The objective of all EEM programs is to save utility costs in the long run. An important criteria of funding improvements is that the overall savings should be higher the amount invested upfront. To help you in determining the viability, the HERS or the Home Energy Rating System carries out a cost benefit analyses by measuring the current energy consumption and the possible savings. If the numbers are favorable, the house qualifies for an EEM.

Advantages of EEM

The key benefit of EEM stems out of the fact that an energy efficient house decreases costs of living and provide for better savings, hence an increased borrowing capacity. In the VA and FHA run programs, you could negotiate betters terms for the mortgage. Energy Efficient systems automatically increase the value of your property besides providing you with a better quality of life.

What Next?

The first step in acquiring an EEM would be to order an HERS survey and report thus ensuring the kind of refinancing scheme that you would qualify for. Shopping for EEM Refinancing scheme is very similar to conventional housing finance. It would do you good to with a lender who is experienced in such refinancing schemes. Call for a few proposals and choose the one that suits your best.Converting your home to a more energy efficient place could be quite an eye opener even prompting you to re-look at your trading in your car for a more efficient hybrid model.

Mortgage Refinance to the rescue of troubled Option ARM borrowers

Using Option ARM to finance your home may have offered the benefit of very low monthly payments in the beginning but will certainly increase the burden of payments as time goes by landing the homeowner in a financial crisis. A way out of the risks of Option ARMs is to use Mortgage Refinance.The terms of Option ARMS allow the homeowner to choose from various repayment options depending on the homeowner’s liquidity, each month. In such a scheme, the homeowner payments could range from paying a major portion of the amount upfront or smaller and smaller payments, if the monthly budget is tight. Generally, one of the following broad options are chosen by Option ARMS consumers:

• The largest monthly payment option: Short loan mortage tenure (a 15 year period).

•   Smaller payment option: Long term tenure (a 30 year period)

•   Interest payment only, without touching principal repayment

•   Smallest payment option: Enabling part payment of the interest without principal payment

Option ARMs: Advantages and Disadvantages

Option ARMS provides such huge flexibility primarily addressing people with irregular income such as sales representatives awaiting there commissions, part time workers, students about to graduate and expecting lucrative jobs etc. Allan Greenspan, the former Federal Reserve chairman and such other experts have commented that quite a few consumers use such facilities to buy homes that they could not normally afford and end up in huge financial mess.Financial woes start when negative amortization sets in. This means your principal debt starts increasing. Option ARMs do provide great payment flexibility but on the down side, the floating interest rates on the loan could change. Given that the interest rates have been increasing in the past two years, the monthly loan payout could, in some cases, double in a matter of weeks or months. This dramatic increase in outflow spells financial crisis for the borrower.

How refinancing your Mortgage can help

The recent housing boom saw a dramatic rise in borrowers opting for Option ARMs as a way of financing their home mortgages. Such people now find the terms of financing too costly leading up to major default. If you are one of them, then the way out would be to get your loan refinanced with a conventional 30-year fixed rate mortgage. This would bring in a great amount of predictability while steadily chipping away at the principal. This financial predictability would reduce anxiety and bring in peace of mind.Currently, the rates for fixed rate mortgage are at their historical low. This is a great opportunity for refinancing Option ARMS borrowings. It might cost you a sum to refinance but these costs are rather small compared to the risk reduction and cost of losing your home, if you were to remain in the Option ARMs. So its time now to talk to your lenders about converting your Option ARMs borrowing to a less risky fixed rate mortgage and gain a few hours of peaceful sleep.