As more people are becoming aware of their energy usage, many are focusing on the energy efficiency of their home. There are many things the average home owner can do that will greatly improve their energy efficiency that cost very little money. However there are also many positive changes that will make a great impact on overall energy efficiency of the home that have a substantial cost associated with them. For instance, the average central heat/AC unit costs around 5k for an installation
Financing makes sense for many energy efficiency improvement projects. The reason is that the improvements you make 
in your home will reduce your monthly utility bills. In many cases, the amount of the reduction in utility bills will be greater than the loan payment. So, your total monthly expenses go down while you enjoy the benefits of a more energy efficient home.
The government introduced Energy Efficient Mortgages (EEMs) in the early 1980s. EEMs are loans that cover the cost of energy efficiency upgrades when you purchase a new energy efficient home or remodel an existing home. For remodeling projects, the loan is called an Energy Improvement Mortgage (EIM). Energy Improvement Mortgages are considered to be a type of EEM. Both government and private lending isntitutions offer EEMs for their customers
EEMs have 3 main benefits over conventional loans.
1) You will be able to exceed traditional loan limits with an EEM
2) you don’t have to qualify for the additional money. This means that you can add the cost of the improvements on to your mortgage even if the total loan exceeds the amount for which you would normally qualify. Since the energy efficiency improvements pay for themselves, they don’t count against you.
3) 100% of the cost of the energy efficiency improvements can be financed under the EEM
There are some special requirements with EEMs, specifically the savings have to outweigh the cost
There are two criteria for cost effectiveness:
The mprovements must meet both of these criteria to be considered cost effective and qualify for an EEM.
Most EEM lenders require an evaluation of the home’s energy efficiency in order to qualify projects for a loan. The most widely accepted evaluation method is called the Home Energy Rating System (HERS). The HERS rating process is carried out by a certified rater or energy auditor. The HERS report identifies which improvements will be cost effective for the house and provides estimates of the monthly savings, the cost of the improvements, and the time it will take for the savings to payback the cost.
The first step in obtaining an EEM is to contact potential lenders. You can obtain information on participating lenders by clicking one of the links below.
The most comprehensive information on the EEM program can be found at the Residential Energy Services Network (RESNET). RESNET is a national network of mortgage companies, real estate brokerages, builders, appraisers, utilities and other housing and energy professionals. For more information click on www.natresnet.org.
The are four federal lending organizations which can also be contacted on the world wide web:
Several private lenders that provide EEMs can be located at RESNET as well
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