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Understanding Energy Efficient Mortgage: Your Guide to Sustainable Financing
Definition & Meaning
An Energy Efficient Mortgage (EEM) is a type of mortgage that allows borrowers to finance energy-saving improvements to their homes as part of their home loan. This financing can include upgrades such as better insulation, energy-efficient heating systems, and solar panels. By incorporating these costs into a single mortgage, borrowers can often qualify for a larger loan amount, making it easier to purchase a more energy-efficient home. To obtain an EEM, a home energy rater typically conducts an energy assessment to confirm the home's efficiency, which is then submitted to the lender for approval.
Table of content
Legal Use & context
Energy Efficient Mortgages are primarily used in real estate transactions. They fall under the category of mortgage lending and financing. Legal professionals may encounter EEMs in various contexts, including residential property transactions and refinancing. Users can manage the process of applying for an EEM with the right legal templates, such as those available through US Legal Forms, which can help simplify the documentation required for these types of loans.
Key legal elements
Real-world examples
Here are a couple of examples of abatement:
Example 1: A homeowner wants to purchase a new house that requires a new heating system and better insulation. They apply for an Energy Efficient Mortgage, which allows them to finance these improvements as part of their mortgage, ultimately enabling them to buy a more energy-efficient home.
Example 2: A couple refinancing their existing mortgage decides to include energy-efficient upgrades like solar panels. They obtain an EEM, which allows them to roll the costs of these upgrades into their new mortgage (hypothetical example).
State-by-state differences
Examples of state differences (not exhaustive):
State
Key Differences
California
Offers additional incentives for energy-efficient upgrades through state programs.
Texas
Has specific guidelines for energy-efficient home ratings that may affect EEM eligibility.
New York
Provides various financing options for energy-efficient improvements, including state-backed loans.
This is not a complete list. State laws vary and users should consult local rules for specific guidance.
Comparison with related terms
Term
Description
Energy Efficient Mortgage
A mortgage that includes financing for energy-efficient upgrades.
Conventional Mortgage
A standard mortgage without specific provisions for energy efficiency.
Green Mortgage
A broader term that may include various financing options for environmentally friendly homes.
Common misunderstandings
What to do if this term applies to you
If you are considering an Energy Efficient Mortgage, start by assessing your home's energy efficiency with a certified rater. Gather documentation of any planned energy-saving improvements. You can explore US Legal Forms for templates that can help streamline the application process. If your situation is complex, consider consulting a legal professional for personalized advice.
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