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Check out these great alternative mortgage financing options!

Posted by kim carpenter on December 6, 2009
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I attended my mandatory continuing ed this past week and usually I say that it was the most boring two days of my life but this year was different.  I learned a lot about some alternative financing options that I did not even know existed.  Why?  There are not very many lenders that are approved to do these types of financing options yet they could be very beneficial to buyers in this market.

Energy Efficient FHA Mortgage

  • It is designed to improve the comfort and efficiency of a home.  An EEM will have an immediate effect by lowering your monthly utility bills while increasing your home’s resale value.


  • The amount of home you can afford is determined by your total monthly costs.  If you can cut down on the costs, you will be able to get the home you really dream of.  For example, if you can reduce your utility bills by $100 a month, you could purchase a home with a purchase price of approximately $15,000 more without raising your monthly outlay of costs.


  • The best way to determine the efficiency of the home is with a home energy rating system (HERS) report.  This report evaluates how the home uses energy.  The cost of the evaluation and report is approximately $200 – $300 and can be rolled into your mortgage.  A HERS representative will visit your home to take measurements to determine your estimated energy use and provide a list of recommendations will be made to reduce your energy bills by 30% – 50%.


  • The HERS report will be reviews with your loan documents to determine which energy savings options you are eligible for and what choices will maximize your savings.


  • A meeting will be set up with Energy Consultant.  A list of actions will be approved by you and an amount of money will be put into your escrow account to pay for the improvements.  This means that you do not need any up-front money.
  • Once your loan closes the installation process begins.  Within 90 days the improvements are complete and you will begin seeing reduced energy costs and increased comfort in your new home.  Then the funds will be distributed to the contractorss who performed the work.


Renovation Plus Mortgage –

  • A renovation plus loan will permit a borrower to purchase a home in As-Is condition and add improvements into the loan.
  • If the property is not habitable at closing, the home buyer may escrow up to six months of mortgage payments into the loan thereby avoiding making payments while the rehab is being done.
  • If the borrower needs $35,000 or less, then the loan is a streamline renovation loan and a HUD consultant is not needed.
  • If the borrower needs over $35,000, then a HUD consultant is needed to follow the project to completion.
  • This financing can also apply to a mixed use building whereby 60% of the building is for residential use.
  • The interest rate for a renovation loan is typically 1% higher than a normal FHA loan but once the work is completed, you can streamline your loan to lower your interest rate and lower your payments

I know these types of financing may seem too good to be true but they are not, they are a great option for people wanting to purchase an older home that is not energy efficient by today’s standards or to purchase a bank repo or estate home that needs renovations.  This could really help sell some of the homes in our market that buyers are overlooking.

If you are interesting in getting additional information about these types of loans, give me a call and I can put you in touch with a reputable lender who can answer your questions and then we can go find that dream home.

I hope you enjoy this information and that it helps you or someone you know.!  We at the Marchant Team always strive to deliver our real estate service with the newest and proven tools to assist you with your real estate needs!  I love making dreams come true, one home at a time!

Kim Carpenter “” – Geist/Indianapolis Real Estate Agent


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