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VA loans are known for the many benefits offered, one of which is the 100% financing available for eligible borrowers. However, whether purchasing a home or refinancing, borrowers can also take advantage of improving a home with a VA Loan Energy Efficient Mortgage (EEM). With a VA EEM, the cost to upgrade the energy efficiency of the home can be financed as part of the mortgage. The VA EEM, along with other VA loans, can be obtained by a reputable VA mortgage lender.

Through the EEM program, the VA mortgage can be increased by $3,000 based solely on the documented costs, and up to $6,000 as long as the increase in monthly mortgage payment is not more than the reduction in monthly utility bills associated with the upgrade. Any costs above $6,000 must receive a VA determination. If the veteran performs the work, only the cost of materials will be considered. Here are additional VA EEM guidelines:

VA Energy Efficient Mortgages can be used to:

– Purchase a home, as well as, make improvements to the energy efficiency of the property.

– Refinance an existing VA loan through the IRRRL program and include energy efficiency improvements. IRRRL EEM cannot go over $6,000.

A VA EEM is not available without a VA home purchase loan or VA refinance. The decision to use an EEM must be made prior to closing the mortgage.

Acceptable Energy-Efficient Modifications (but not limited to)

– Solar heating and cooling systems

– Caulking and weather stripping

– Furnace

– Permanent air conditioning  units

– Water Heater

– Clock thermostats

– Ceiling, attic and floor insulation (new or additional)

– Insulation for water heater

– windows and doors

– Heat pumps

– Vapor barriers

Not Acceptable Energy Efficient Improvements

Any improvement that is not permanent to the property is not considered acceptable to to EEM program, such as:

 -Window air conditioner units

 – Appliances such as stove, refrigerator, washer and dryer

 -Any energy improvement that can be taken upon sale of the property, does not qualify.

Escrow Account

When energy efficient improvements are not made prior to closing the VA EEM, an escrow account will be established with the amount of money needed to complete the improvements. The work must be completed within 6 months of the closing date of the loan. A Final inspection or written statement by contractor and or homeowner may be required upon completion to release funds. Any unused funds will be credited back to the principal amount of the mortgage.

Benefits of a VA EEM

Borrowers who choose a VA energy efficient mortgage have the benefit of making an older, less energy efficient home a more comfortable place to live that is also affordable due to savings realized each month on utility expenses.

In addition, the energy upgrades to the home will increase the resale value when selling the property. In a competitive market, energy efficient homes often tend to attract more buyers and result in quicker sales. Over the years, many VA eligible borrowers have used the VA EEM to better improve their homes, their lifestyle and their savings.

Rosemary Rugnetta

For any additional information on facts about VA loans, feel free to contact us at 888-913-5531 or contact@veteranhomefinancing.com

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