nace or improved insulation -- into the total mortgage amount.

Green mortgages have been around for thirty years, according to the EPA. They have been little utilized until now, because they are more complicated to explain to borrowers and they require initiative on the part of the new home owner. Mortgage lenders were also reluctant to offer the green mortgage because until 2003 the lender had to underwrite the mortgage and deal with all of the attendant p

A new wrinkle has emerged in the mortgage market, one which has the potential to allow would-be home owners additional borrowing leverage. Energy efficient mortgages (EEM) are appearing on the radar screen for home buyers who are lured by the promise of lower monthly utility bills and the ability to qualify for larger home loans.

Traditional mortgages are calculated based on a person's debt-to-income ratio. The traditional standard has been that homebuyers should try to keep mortgage payments below 28 percent of gross income. Additional debt such as car loans, short term credit and student loans should not total more than 36 percent of the household’s total gross income. Granted, some of the more high-flying lenders have ignored these standards. That may prove out to be at their own peril, as the 100 percent home financing and the egregious adjustable rate mortgages are forcing many home buyers into desperate situations.

Loan requirements are tightening and many home shoppers are finding that the home of their dreams is just beyond their reach. However the EEM or “green mortgage” is based on the premise that a more energy efficient home will result in lower utility costs. In the east for heat and the south for air conditioning, these figures can be substantial. The theory behind the loan is that since a person will be paying less in utility bills their remaining income will be higher and that will provide additional monthly cash to go towards a higher mortgage payment – and a nicer home.

Under the loan’s terms, a home buyer can borrow up to 15 percent of the home's value to spend on improvements. That money is held in escrow to be used to pay the cost of making the home more efficient. By increasing borrowing power, an energy efficient mortgage allows borrowers to fold the costs of energy improvements – such as a new furnace or improved insulation -- into the total mortgage amount.

Green mortgages have been around for thirty years, according to the EPA. They have been little utilized until now, because they are more complicated to explain to borrowers and they require initiative on the part of the new home owner. Mortgage lenders were also reluctant to offer the green mortgage because until 2003 the lender had to underwrite the mortgage and deal with all of the attendant p

hould try to keep mortgage payments below 28 percent of gross income. Additional debt such as car loans, short term credit and student loans should not total more than 36 percent of the household’s total gross income. Granted, some of the more high-flying lenders have ignored these standards. That may prove out to be at their own peril, as the 100 percent home financing and the egregious adjustable rate mortgages are forcing many home buyers into desperate situations.

Loan requirements are tightening and many home shoppers are finding that the home of their dreams is just beyond their reach. However the EEM or “green mortgage” is based on the premise that a more energy efficient home will result in lower utility costs. In the east for heat and the south for air conditioning, these figures can be substantial. The theory behind the loan is that since a person will be paying less in utility bills their remaining income will be higher and that will provide additional monthly cash to go towards a higher mortgage payment – and a nicer home.

Under the loan’s terms, a home buyer can borrow up to 15 percent of the home's value to spend on improvements. That money is held in escrow to be used to pay the cost of making the home more efficient. By increasing borrowing power, an energy efficient mortgage allows borrowers to fold the costs of energy improvements – such as a new furnace or improved insulation -- into the total mortgage amount.

Green mortgages have been around for thirty years, according to the EPA. They have been little utilized until now, because they are more complicated to explain to borrowers and they require initiative on the part of the new home owner. Mortgage lenders were also reluctant to offer the green mortgage because until 2003 the lender had to underwrite the mortgage and deal with all of the attendant p

ions.

Loan requirements are tightening and many home shoppers are finding that the home of their dreams is just beyond their reach. However the EEM or “green mortgage” is based on the premise that a more energy efficient home will result in lower utility costs. In the east for heat and the south for air conditioning, these figures can be substantial. The theory behind the loan is that since a person will be paying less in utility bills their remaining income will be higher and that will provide additional monthly cash to go towards a higher mortgage payment – and a nicer home.

Under the loan’s terms, a home buyer can borrow up to 15 percent of the home's value to spend on improvements. That money is held in escrow to be used to pay the cost of making the home more efficient. By increasing borrowing power, an energy efficient mortgage allows borrowers to fold the costs of energy improvements – such as a new furnace or improved insulation -- into the total mortgage amount.

Green mortgages have been around for thirty years, according to the EPA. They have been little utilized until now, because they are more complicated to explain to borrowers and they require initiative on the part of the new home owner. Mortgage lenders were also reluctant to offer the green mortgage because until 2003 the lender had to underwrite the mortgage and deal with all of the attendant p

me will be higher and that will provide additional monthly cash to go towards a higher mortgage payment – and a nicer home.

Under the loan’s terms, a home buyer can borrow up to 15 percent of the home's value to spend on improvements. That money is held in escrow to be used to pay the cost of making the home more efficient. By increasing borrowing power, an energy efficient mortgage allows borrowers to fold the costs of energy improvements – such as a new furnace or improved insulation -- into the total mortgage amount.

Green mortgages have been around for thirty years, according to the EPA. They have been little utilized until now, because they are more complicated to explain to borrowers and they require initiative on the part of the new home owner. Mortgage lenders were also reluctant to offer the green mortgage because until 2003 the lender had to underwrite the mortgage and deal with all of the attendant p

nace or improved insulation -- into the total mortgage amount.

Green mortgages have been around for thirty years, according to the EPA. They have been little utilized until now, because they are more complicated to explain to borrowers and they require initiative on the part of the new home owner. Mortgage lenders were also reluctant to offer the green mortgage because until 2003 the lender had to underwrite the mortgage and deal with all of the attendant paperwork.

Now however Fannie Mae is not only underwriting these mortgages but they have revamped the program by making it compatible with the Desktop Underwriter software that most lenders use, alleviating some of the technical difficulties associated with issuing these mortgages.

An energy-efficient home can save a homeowner one third to one half on home energy costs, according to the National Association of Realtors. Estimates are that heating bills for all fuel types will cost Americans about one-third more this winter on average - assuming typical weather. If it’s a cold winter, the increase will border on 50 percent. The savings in countering these types of increases amount to substantial annual home operations costs and suddenly, these mortgages are a viable choice.

A borrower can qualify for an EEM upfront for a newly constructed home if it is certified by the builder that the home was designed and built to meet energy efficiency guidelines. There are also certified home energy rating appraisers that can inspect the home and issue a Home Energy Rating System (HERS) report qualifying the structure for the loan whether it is a new or existing home.