All Energy Financing Options I am Currently Aware
There is clearly a desperate need for information regarding Energy Financing Options. I have provided this to a few different organizations so they could compile it and get it out to everyone. So far I have not located any platforms where it is being distributed. The few examples that I have seen contain so many errors and flaws in the information on the programs I am personally very experienced in, that I completely appreciate why people do not want to rely on any of what they are seeing. I also understand that there is some hesitation on the part of some people to release this information because they are not confident that it is accurate or complete. I decided to include the programs I do not know well on this matrix also, and just be clear about the limits of my understanding on each of them.
The following chart includes the programs that I know very well and cover in great detail in other areas of this site. It also includes programs that are not in the direct scope of my business but I am aware they exist. I am offering these so that people know they are available, and where to get further information on them. I am sharing whatever insights I can on them. As I get further information, I will update this matrix.In regards to the programs I am mentioning here that I do not personally work with, I would invite those who are more familiar with them to share their knowledge.If you know of programs that I am unaware of, please provide me with the details. I will update this resource and direct people to where they can access the information.
Prepared by Kevin Nunn, Comstock Mortgage for the benefit of Contractors, Loan Officers, Realtors, and others interested in the Residential Energy Financing area. Intended as a general reference for Energy Financing structures.
| Program | Notes | Level of Confidence in Information Provided |
| EEM | Currently this option really only works effectively with FHA or VA financing. In many ways this is, by far, the best financing option for energy upgrades for many people. It is incorporated into their 1st loan with the same favorable rate and terms. The qualifying amount of the EEM does not get included in the appraisal or qualifying ratios. It is somewhat limited in scope though, since it can only be used in conjunction with a new 1st loan and it is somewhat restrictive on the amount of upgrades that may be included. It may be used in conjunction with the 203K andStreamline 203K loans.
I have included extensive information regarding this program on this site. Hopefully this will mitigate some of the misinformation that is being circulated regarding this strategic option. |
It is very likely that I have done more Energy Efficient Mortgages than any other Loan Officer in the nation. In addition I have done extensive teaching and consulting regarding this program. I will put my knowledge up against anyone when it comes to the EEM. I am very confident in regards to the accuracy of the information pertaining to this program. |
| Weatherization
Program |
This is a program that can be a great enhancement to the EEM when just a little more funding is needed. This is a great program in general but it can be somewhat confusing, particularly to Escrow Officers. I would strongly suggest you read the detailed explanations of the potential issues and how to avoid them on the Weatherization Fact Sheet I provided before including this. | I have included the Weatherization component on many transactions over the years. |
| Streamline 203k | Realistically only $28,000 to $31,500 can be included in energy upgrades or other improvements due to Contingency Reserve Considerations. Typically this is 10 to 20% of the actual projected scope of work. Technically, the reserve is not required. To my knowledge though, no lender will currently allow a Streamline 203K without a contingency reserve including my company.(However, I will reduce the required contingency to 10% for an energy package). Also, the full amount of the bids, contingency, and fees cannot be financed as this is generally represented. This amount is added to the sales price or as-is appraised value, before the down payment is calculated. Even if the total of the bid, contingency, and fees totals $35,000 the amount that is financed will never exceed $33,775 as the buyers Down Payment requirement would be increased by $1,225. The Streamline version will not allow Solar as it does not permit any structural items. Up to 106.15% of the after improved value may be financed as opposed to 96.5% on a standard FHA Loan. This may be exceeded by an additional 5% when an EEM is included. May be used for purchase or refinance. Minor differences apply to the allowable percentages on a refinance. This program covered in much greater detail on 203K(s) area. | I have done many of these and am often called upon to fix these by other lenders who have attempted to do one and have run into difficulties. I have done extensive training for Realtors, Loan Officers and Underwriters on this product. I realize that a lot of what I’m going to tell people regarding this option is very different than what is typically represented and even what some of the guidelines state. I am very confident in the information that I am providing regarding this program. |
| 203K | The same basic guidelines as the Streamline 203K apply with the following differences. No limit on amount financed for Energy Improvements although the amount financed may not exceed 106.15% of the after improved value. (This actually means that 9.65% of the value may be added for energy upgrades without an additional value consideration since the maximum loan on a standard FHA loan would be 96.5%) May finance up to the applicable FHA loan limit for the County (currently $580,000 for Sacramento County). Solar Panels (PV) may be included in the Full 203K. Although you can technically exceed the applicable County FHA loan limit with Solar, other restrictions render this virtually impossible in most instances. The EEM program may also be stacked on the 203K to allow for an additional 5% in qualifying energy upgrades without appraisal considerations. For clarifications please see my specific program description area for this program. | This is not a product that I get a lot of demand for since the Streamline 203K is usually sufficient, however I am pretty confident in the information I am providing pertaining to this program. With the considerations being given to renewable options in the HERS II software and the ability to integrate this into the HERE model, I expect that we will be doing a lot more of these. |
| Cash-out Refinance | Requires sufficient equity. May be a great option based on the current interest rates depending on what a homeowner currently has on their house. When integrated into the HERE model it can be a great opportunity for someone to offset the refinance costs and enjoy the additional comfort, affordability and reliabilityof a home with updated energy features. | This is pretty straight forward and basic, there is not a need for me to provide a lot of technical information pertaining to this approach. |
| Reverse Mortgage | This is another area that seems to have been completely overlooked. There is a tremendous opportunity to upgrade or repair the energy components of the housing of our seniors who may desperately need this and not have a means currently to accomplish it. I will be presenting a specific and advantageous structure for this opportunity within the next few days.When integrated into the HERE model it can be a great opportunity for a senior to offset the loan costs and enjoy the additional comfort, affordability and security of a home with updated energy features. In some ways one of the most unfortunate results of not pursuing a strategy like the HEREmodel has been the number of seniors who are living in houses with substandardor non-functioning energy related components that could utilize the equity line option of a Reverse Mortgage to take out just enough to address these issues and make their home more comfortable, off-set the loan costs with the rebates, and actually reduce their energy bills by enough that they could utilize the cash flow from the energy savings to pay off the balance on the equity line if they were so inclined. | This is a product that is a bit of a specialty. Although I have the ability to do these through my company, I generally refer them to those individuals who specialize in this product to ensure that the clients are getting the highest level of service and expertise. The specifics of the financing structure within the Reverse Mortgage area I will be adding in the next few days, I vetted with the people I am confident have legitimate expertise in this area. Reverse Mortgages are ideally suited to the HERE model. |
| VA EEM | The mortgage may be increased by
· up to $3,000 based solely on the documented costs · up to $6,000 provided the increase in monthly mortgage payment does not exceed the likely reduction in monthly utility costs, or · more than $6,000 subject to a value determination by VA. |
I have done a few of these over the years. Under $6,000 it is pretty easy. I would not attempt to exceed the $6,000 as I feel that it would be impractical within the VA required procedures. |
| Residential Energy Retrofit Program | This program is being offered through an organization called CHF. Initially, it was going to be offered just in the rural counties. I was recently informed that it will be offered in Sacramento County, I am not sure about other urban areas. This is a program that is being funded through stimulus funding. There is a total of 18.5 million dollars available for this including 2 Million being contributed by the organization themselves. They will be offering very low interest rate loans. These will be secured by the equipment, not the property.
Details on this program may be found at: http://www.chfloan.org/Programs/Energy/energy_program.html Please note that Contractors must apply and be approved to participate in this program. When I reviewed this program, there were several concerns that I had regarding some of the specifics in relation to financing considerations. I have not received a response to my concerns yet, although I did notice some changes have been made to some of those items. |
CHF is an organization that is very established and I have worked with them extensively over the years on affordable housing programs they administered. They are very competent in this area and I am sure they will get the details worked out. Since I do not believe that they have funded any loans yet, I do not have any first hand knowledge regarding this specific option. I would suggest though, that you watch this opportunity as it develops. It has the potential to fill some important gaps in financing options. |
| FNMA HomeStyle Renovation | This is FNMA’s version of the Full 203k program. It can be done for both owner occupied and non-owner occupied properties. Very few lenders offer this product. That is unfortunate because it offers some significant advantages for some situations and is one of the rare opportunities for investors to upgrade the energy efficiency of their properties. Up to 50% of the after completed value may be improvements and upgrades. Energy related components may be included; however, they must be supported in the appraisal. | This is a product that I am currently unable to offer. I am hoping to have this product back very soon. I have not done a lot of these, but I have certainly done enough to be pretty confident in my knowledge pertaining to them. |
| Line of Credit | Requires that a homeowner have sufficient equity in their home. In cases where they do, this can be an excellent opportunity for them to take advantage of the incentives and programs currently available for energy related retrofitting. In many cases, the energy savings will cover the payment on the equity line.
I am not sure what the highest loan to value is that is currently available on Equity Lines while still offering reasonable interest rates. I can offer Equity Lines but choose not currently since I feel that there are better options available to people than what I can offer at the moment for this product.I do know that they can get as high as 85% of the value since I have been referring all clients who are looking for Equity Lines to US Bank and I know that they will now go up to 85% again. |
Although I have done many equity lines over the years, I am not currently competitive on this particular product with other options that are available to people. As a result, I have been referring any clients that need Equity Lines to US Bank. Specifically I refer them to a lady named Kris Inlow. I am sure that there are many great options for this. If you need someone who I have a lot of confidence in, Kris can be reached at kris.inlow@usbank.com (and no, I do not ask for nor receive any referral fees from Kris. I am just grateful that she has been so good to the people I have referred over to her). |
| Title 1 | Up to $25,000. Very few lenders offer this. Term 5 to 25 years rate 6.95% to 11.95%. This can be an advantageous option in some cases. Currently there are very few sources for this. | This is a product that I used to do but do not currently have a source for. I know that there are a few credit unions that offer them but people must meet the membership criteria. There may be other sources but I have not located them. |
| SMUD | Offer secured and unsecured options. Currently 8.75 secured and 10.75%. Full qualifying. They follow the CPUC model in regards to projected useful life for financing terms. | I don’t offer SMUD financing. It is available only through them. I do know that the qualifying criteria can be a little tight. |
| ViewTech | Stated Income, 15.99% to 16.99% in Northern California depending on credit score. Unsecured $5,000 to $20,000. | I know nothing at all about this from first hand basis. I do know that this can be a very expedient way for someone to finance energy upgrades. |
| EGIA | Up to $25,000 to 100% of installed cost. | I do not know anything about this other than this option exists. |
| Signature Loans | Homeowners secure an unsecured loan from a banking institution. | The rates are going to be high, but this is an option. If someone is anticipating some money soon that would give them the ability to pay this off quickly, this can offer some advantages since the fees are low in relation to other loans. |
| Solar Lease Programs | Company retains ownership and receives incentives. Homeowner leases equipment. | Solar financing is something that is available under the full 203k program and/or EEM. Other than that, I do not currently have a lot of information in regards to opportunities around this. I do know that some companies are currently offering lease options. I will update this area as I learn more about it. |
| FNMA Energy Efficient Mortgage Program | This program was recently introduced. It does not appear to have any practical application whatsoever. Under the way the program is structured now it appears that it would conflict with Private Mortgage Insurance. If the resulting LTV would be low enough to not require PMI it would make more sense for someone to just use the difference to pay for the energy upgrades. | Since I cannot find any applications wherein this appears to offer any real advantages, I have not elected to offer this to my clients so I cannot speak from firsthand experience. |
| 401K Loan | This can be a very viable option for some people. They can take a loan against their 401K and use the money to pay for the energy upgrades. They could use the energy savings to repay the 401K Loan.I would however suggest that anyone who is considering this strategy consult their financial advisor first. | Obviously, this is not something I participate in. I do know that this can be a very strategic method to finance energy upgrades. It is often overlooked. |
Sacramento 1st DBA Comstock Mortgage – Lic : 01390474
Kevin Nunn – NMLS 305826 / DRE 01158674
