Sunday, January 2, 2011

REMODELING & ENERGY UPGRADES: Fannie Mae to Fund Energy Efficiency Upgrades

Fannie Mae has developed a new mortgage program you can use to finance energy efficiency improvements in your primary residence, second home, or investment property.

You have to use 100% of the funds to pay for the energy improvement project, and you have to get a Home Energy Rating System (HERS) report showing the improvements are cost-effective.

If you use the loan to purchase a house, the most you can borrow is the purchase price plus the cost of the energy improvements, or the value of the house once the improvements are complete, whichever is lower.

For a refinance, you can take cash out of the house, but only enough to cover the cost of the improvements, plus an energy report showing that the improvements will be cost-effective.

The lender will hold the loan funds and release them when the improvements are done. You get six months to finish the upgrades. If there is money left over after you finish the upgrade, it has to be used to pay off the loan.

The loans can’t be used to upgrade 2- to 4-family properties, co-ops, or manufactured homes. December 22, 2010

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