Articles Tagged With: Energy Efficient Mortgage

December 27, 2017

Is It The Right Time To Refinance My Home Loan?

Is it the right time to refinance my home loan? The answer to that question depends on a variety of factors, but there are some things to remember no matter when you decide to refinance a home mortgage loan. A September 2017 report by Fortune.com includes data that indicates a general increase in home prices, including the observation of the “65th straight month that prices have risen year-over-year”. That same report mentions that “housing inventory declined for a 26th straight month on a year-over-year basis”. In housing markets where property values are going up, certain kinds of refinance loan options become more attractive. An FHA cash-out refinance loan makes more sense for borrowers who have more equity in the home; cash out refi loans require a new appraisal and if | more...

December 13, 2017

FHA One-Time Close Requirements: Appraisals

By Bruce Reichstein

FHA One-Time Close / Single-Close construction loans feature a single loan application and closing date for both the construction phase of the loan and the “permanent” portion of the loan. Like other FHA mortgages, an appraisal is required on the property to be secured by the mortgage. In general, FHA loan appraisal requirements include the following guidelines on the timing, as found in HUD 4000.1, the FHA loan handbook: “The effective date of the appraisal cannot be before the FHA case number assignment date unless the Mortgagee certifies that the appraisal was ordered for conventional lending or government-guaranteed loan purposes and was performed pursuant to FHA guidelines.” While this may not normally be an issue for construction loans given the timing of the appraisal, another portion of the same section | more...

Can I buy a manufactured home with an FHA loan?

June 22, 2016

Are You Ready For An FHA Mortgage?

By Joe Wallace

A recent CNN Money article reveals that more than 10 million Americans spend half their income on rent. It’s a figure (based on a 2014 study at Harvard) that is surprising to some, and motivating for others. Are you considering an FHA mortgage as an alternative to high rents? FHA home loans have features that can be very helpful to those in the market for a new home. Consider the down payment requirement for an FHA mortgage compared to many conventional loans and it’s easy to see that the FHA’s 3.5% down payment requirement compared to between 10% and 20% down for conventional mortgages depending on the lender and the borrower’s financial qualifications. The lower down payment is one factor; another is the borrower’s ability to refinance an FHA mortgage | more...

December 8, 2015

FHA Home Loans For Existing Properties: Weatherization

By Joe Wallace

Did you know that in certain cases, FHA single-family home loan rules in HUD 4000.1 permit the borrower to add funds to weatherize an existing construction home being purchased with an FHA mortgage? According to HUD 4000.1: “The weatherization product permits the Borrower to finance the cost of eligible energy-related weatherization improvements, in conjunction with a purchase or refinance.” This is separate from an FHA Energy Efficient Mortgage (EEM) though that can also be included in the loan for qualified borrowers. From HUD 4000.1: “Weatherization improvements may be financed in conjunction with the following: –Section 203(b) purchase transaction (or) no cash-out refinance transaction –Section 203(h) Mortgage Insurance for Disaster Victims –Energy Efficient Mortgages (EEM)” The loan rules for this type of FHA mortgage or refinance includes a list of eligible | more...

November 3, 2015

FHA EEM “Stretch Ratios” For Existing Construction Loans

By Joe Wallace

In our last blog post we discussed a new partnership between the FHA/HUD and the Department of Energy which is allowing eligible borrowers to get access to increased “stretch ratios’ under FHA energy efficient mortgages in 2016. According to an FHA press release, “FHAs existing EEH policy allows stretch ratios for homes that are built or retrofitted to the 2000 International Energy Conservation Code (IECC). For standard FHA loans, debt-to-income (DTI) ratios are limited to 31 percent (front-end) and 43 percent (back-end).” How do these ratios “stretch”? According to the press release, “Under FHA policy for the EEH mortgage, these DTI ratios can be increased to 33 percent and 45 percentrespectively. To increase opportunities for homeowners to achieve and benefit from an energy efficient home, FHA is adding a new | more...

September 9, 2015

Energy Efficient Mortgages And Updated FHA/HUD Rules

By Joe Wallace

In a recent blog post we discussed the pending release of HUD 4000.1, which is the new FHA single family home loan policy handbook. Among the changes and updates to take effect on September 14, 2015 when the handbook is launched, there are some guidelines about FHA Energy Efficient Mortgages (EEM) and the financing of non-EEM energy efficient upgrades/improvements. One area we didn’t cover in our last blog post about the EEM issue is the dollar amount limit for these upgrades. How much does the FHA allow the borrower to finance for such improvements? According to the FHA official site, which has a FAQ section on the most common questions about new rules and updates that will be part of HUD 4000.1, we learn the following about the dollar amount | more...

September 9, 2015

HUD 4000.1 Frequently Asked Questions: EEM

By Joe Wallace

On September 14, 2015, the new FHA Single Family Home Loan policy handbook goes into effect. There are changes to existing policy, clarifications of existing policy, and other useful information for lenders and borrowers alike. We’re examining some frequently asked questions about FHA loan rules–the answers to which will be official FHA policy when the new handbook launches on the 14th. One area that has a variety of questions concerns the FHA’s Energy Efficient Mortgage (EEM) program. Can a borrower finance energy efficient repairs without taking out an FHA EEM? What are the borrower’s options as described in HUD 4000.1? According to the FHA/HUD official site: “The borrower can finance the cost of eligible energy-related weatherization improvements in conjunction with: –Section 203(b) purchase or no cash-out refinance –Section 203(h) Mortgage | more...

May 1, 2014

FHA Energy Efficient Mortgage Loans: A Reader Question

By Joe Wallace

A reader asks, “Can an FHA EEM loan be a stand alone or does it need to be a part of a purchase money loan or a refinance loan?” The FHA Energy Efficient Mortgage program allows a borrower to add money to a new purchase home loan or an FHA refinance loan–money that is intended to be used for approved energy efficient upgrades to the home. The rules governing FHA EEM loans are found in HUD 4155.1 Chapter Six Section D, which states in part: “New and existing one to four unit properties, including one unit condominiums and manufactured housing properties, are eligible for the Energy Efficient Mortgage (EEM) Program. EEMs may be used for both purchases and refinances, including streamline refinances, with • Section 203(b) • Section 203(k) rehabilitation | more...

March 4, 2014

FHA Energy Efficient Mortgages

By Joe Wallace

There is an option for FHA new purchase home loans and refinancing loans called the Energy Efficient Mortgage (EEM). According to the FHA loan rules found in HUD 4155.1, “Under the EEM Program, a borrower can finance 100% of the cost of eligible energy efficient improvements into the mortgage, subject to certain dollar limitations, without an appraisal of the energy efficient improvements. For the EEM Program, the mortgage amount includes the cost of the energy efficient improvements, in addition to the usual mortgage amount normally permitted FHA maximum loan limit for the area may be exceeded by the cost of the energy efficient improvements energy efficient improvements must be cost effective in order to be included into the mortgage, and amount of the cost effective energy package is added to | more...

January 13, 2014

The FHA Energy Efficient Mortgage Loan

By Joe Wallace

The FHA loan program includes something called an Energy Efficient Mortgage. This program allows the borrower to apply for additional funds in order to make approved energy efficient upgrades to the property to be purchased with an FHA home loan. According to the FHA loan rules in HUD 4155.1 Chapter Six, Section D, the FHA EEM program allows the borrower to finance “100% of the cost of eligible energy efficient improvements into the mortgage, subject to certain dollar limitations, without an appraisal of the energy efficient improvements.” For the EEM Program, Chapter Six Section D says: mortgage amount includes the cost of the energy efficient improvements, in addition to the usual mortgage amount normally permitted FHA maximum loan limit for the area may be exceeded by the cost of the | more...