Mortgage Updates

Until Real Estate markets and the housing  industry return our economy will continue to flounder.  Housing brings construction jobs, home improvements and the eventual purchase of landscaping - gardening supplies and new or almost new furniture.  This in turn creates jobs, production and retail sales.  Perhaps this cash for appliances program, which really comes out of global warming beliefs, will further help families afford their homes. 

The coming "carbon foot prints" legislation will have a dramatic effect on the cost of utilities, heating air conditioning and general household use of electricity.  The wise person will take advantage of these credits to provide for future savings.  In California we have a State run program called CHEERS (California Home Energy Efficiency Rating Service) which oversees energy raters.  It is the responsibility of these raters to evaluate a home's energy efficiency, provide a plan to increase the that efficiency through a cost benefit  analysis.  This is something any home owner can order.  The fee for this service is similar to an appraisal fee.

For a home buyer, the energy rating can be used to increase the energy savings by adding the cost (provided by the analysis) to the loan amount.  This is only in the case of government loans.  The lender qualifies the borrower for the purchase, then ads the energy improvement costs to the loan. (No additional qualifying.)  This can make a significant difference in utility costs for buyers of older homes since the EEM (Energy Efficient Mortgage) also covers replacing single pane windows, adding insulation in addition to the afore mentioned items like updated heating and air systems.  In newer homes with raised foundations, often the "blower/pressure test" shows that the ducting has loosened and is leaking - a less costly fix but a money savor.  With the work being completed after the close of escrow there has been little resistance to the program from Realtors or sellers.

The additional "cash for appliance" program just ads another incentive to make energy efficiency part of the home buying process. With the rebates available, even existing homeowners may want to take a closer look at increasing the energy efficiency of their homes since the EEM is also available for government loan refinance transactions.