The FHA's PowerSaver program allows eligible owners to borrow up to $25,000 at fixed rates for as long as 20 years to finance energy-conservation retrofits. Fannie Mae has an energy-improvement mortgage add-on program.
If you've been looking for a way to pay for energy improvements to your house, two little-publicized new mortgage programs could provide the cash you need.
Both the Federal Housing Administration and mortgage investor Fannie Mae recently have launched options in the energy conservation arena. Here's a quick overview, with some pros and cons:
Both the Federal Housing Administration and mortgage investor Fannie Mae recently have launched options in the energy conservation arena. Here's a quick overview, with some pros and cons:
Although PowerSaver is officially a pilot program, Shaun Donovan, secretary of Housing and Urban Development, estimates that 30,000 such loans will be closed in the next two years. It eventually could become a major national program for residential energy upgrades, with total loans extending into the millions, he said.
One important element in the program is energy audits. Although they won't be mandatory, most participating lenders are expected to encourage owners to sign up for an energy efficiency analysis by a certified specialist. The audit should pinpoint where your house is leaky or otherwise inefficient in energy use, and should recommend the specific types of upgrades or additions that could help cut your bills and reduce greenhouse emissions.
The FHA will insure loans to cover the improvements up to the $25,000 maximum under the following guidelines:
•The house must be your principal residence, detached and single-family only. No rentals, no investor homes, no second homes.
•You'll need to demonstrate that you are a solid credit risk. Minimum FICO credit scores of 660 are required, plus your total household monthly debt-to-income ratio cannot exceed 45%.
•Houses with negative equity will not qualify. You'll need some level of equity in the property; there is no mandatory minimum stake, but the combined primary mortgage debt plus the PowerSaver second lien cannot exceed 100% of the appraised market value of the house. You could, for example, have a 10% equity position in a $200,000 home, and still qualify for up to $20,000 in a PowerSaver.
•Lenders are likely to take an extra hard look at all your income and asset documentation because, unlike other FHA-insured mortgages, PowerSaver will cover only 90% of the lender's loss or insurance claim in the event of a default.
Read the original post from LATimes.com
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