13 October 2009 ? If you thought it was tough getting a loan before? well? it just got tougher.

For those in the market to purchase a property the job of doing so just got more difficult. Due to the financial meltdown and poor loans given out in the past, Fannie Mae and Freddie Mac have tightened their purse strings yet again.

Starting Nov. 1 or Dec. 12, depending on the type of loan, anybody with a credit score of less than 620 will have a more difficult time getting a mortgage. Fannie Mae is tightening lending standards to the 620 benchmark, even for loans backed by a federal agency such as the Federal Housing Administration or Veterans Affairs. Currently the lowest credit score is 620 for a loan, but rumor has it that Fannie and Freddie will be increasing that number to 640. Stay tuned for more on what is to come.

Do you know what the minimum credit score is to qualify for a home mortgage? Currently it?s a mid credit score of 620, but this may change very soon to 640. In fact, some banks have already stopped taking loan applications with a 620 mid score.

What’s a Mid Credit Score?

Managing Your Credit Is Essential to Getting a Mortgage?Minimum Credit Scores for Mortgages Are Rising

When applying for a home loan your mortgage professional will pull your credit scores from three different reporting agencies: Transunion, Equifax, and Experian. (Keep your fingers crossed). The bank that you are applying with will then use the mid score (the one in the middle) from these 3 agencies to then assign a credit risk to you. Not only does your credit score affect whether or not you will get an approval from Fannie Mae or Freddie Mac, but it also affects the interest rate you receive on your home loan. It?s a pretty simple formula: the higher the score, the lower the interest rate.

This is why it is so important to obtain the highest possible mid score as this will save you monthly on your payments and save you thousands in interest over the term of the loan. For example, on a $250,000 loan every .25% shift in the interest rate will yield about a $40 difference in the payment. If your mid score is 740+, you will get the best possible rates available in the market.

Credit Scores Are Very Important

There has been a lot of research done on the performance of home loans and the results are in?the lower the credit score on a home loan, the higher the default rate and the more frequent are late payments. I know these results aren’t probably very shocking to you. The reality is that not everyone is ready or prepared to be a home owner, so this is why it is necessary to consult with a mortgage professional who can help you with all the details: the importance of credit, budgeting, and having sufficient savings in the bank to be ready for this huge step in your life. Being a homeowner is one the biggest steps you will take in your life next to getting married and having children. If you are serious about becoming a home owner, a strong first step is to meet with a mortgage professional to discuss the steps necessary to take this plunge. Good luck!

We would like to thank Andres Reuda for sharing today’s photo via the Creative Common’s License

19 August 2009 ? The Federal Housing Administration?s 203(K) loan is gaining popularity as more and more distressed homes are entering the marketplace due to foreclosures and short-sales. According to data released last week by the Office of the Comptroller of the Currency, more than 11,000 loans have been insured thus far this year: a 50% increase from last year?s numbers and doubling from the year prior. Surprisingly, the 203(k) program has been around since 1978, and is an option for consumers who are purchasing or refinancing. This loan allows qualified borrowers, who will occupy the property, to obtain one loan to both purchase and renovate a home, with only 3.5 percent down payment. Renovations can range from cosmetic improvements like new kitchen or bathroom tiles to major projects like a new garage or roof. Some analysts are predicting that because foreclosure moratoria earlier this year helped to limit the supply of homes coming on the market during the spring and summer?an estimated 2 million?we can expect a flood of new foreclosures entering the marketplace in Fall/Winter 2009 through Spring 2010. If this is the case, we should see a further spike of insured 203(K) loans.

Not since the post-1987 stock market, have so many sellers been ?upside down? on their mortgages. Unlike this early 1990?s real estate market, when sellers commonly would bring money to closing to make up the difference, banks are now commonly willing to forgo part of what is owed to them to get the liability off their books.

Short Sales Can Mean Delays and Stress

Deal or No Deal? You may not know for quite some time with short sales.

There are many more people in trouble now (and typically short a lot more money than in the early 90?s) than any other time in the past. Getting a great deal through a short sale is a popular idea. However, this type of sale does not come without some challenges for both the buyer and seller. As they say, no pain, no gain.

One example of short sale drama is Joe Nichol. After accepting a new job in Chicago and moving from L.A., Joe decided to buy his first condo in The Fordham building at 25 E. Superior. After a long negotiation, Joe was excited to move in to his first place in time to start his new job downtown. However, a few days into the attorney?s approval, Joe got a call from his attorney. Turns out, the seller of the condo could not pay off his existing loans to sell the property. This is where the stress began for all involved.

A Real Short Sale Story…of Waiting and Stress

For the next 3 1/2 months, Joe was not sure if and when he could close on the condo. He had to rent a temporary apartment and put his things in storage. The biggest part was the lack of communication from the seller?s mortgage holder. It took almost 3 months just to be assigned a ?negotiator.? After this, the bank needed detailed financial information from the seller, confirming that he did not have any assets to make good on the loan. The fact that the seller had not paid his mortgage in 2 months helped the bank move things along a little more quickly.

Joe closed on his condo, after enduring almost 4 months of stress and frustration. The day of the closing, the bank almost cancelled the deal because of some numbers that they thought were being changed on the RESPA. Banks are always looking out for sellers who are trying to profit somehow from a short sale. Luckily, Joe?s attorney and the seller?s attorney smoothed everything out with the bank and the sale closed.

A Not-So-Bad Short Sale Story

Another short sale that was recently sold with minimal drama was a multi-unit building in Lakeview. In this case, everyone knew it was a short sale up-front. Like many short sales, this building had multiple offers, ten to be exact. Some offers were very low and some very solid. This building had two mortgages. Luckily, the second mortgage agreed to take virtually nothing of what it was owed and the first mortgage took about a 10% hit. This deal closed in 4 months and went very smoothly.

Short sales can be easy or very difficult. You can have delay after delay and many surprises. If everyone knows what they are getting into, it helps to keep confusion and drama out of the picture. In this market, make sure you know if you are buying from someone that is even close to being ?short,? especially if you need to close by a specific date (as most of us do!).

We’d like to thank KamalSell for so generously sharing today’s photo via the Creative Commons License.

15 July 2009 ? According to a recent article in the Wall Street Journal, Stan Liebowitz, University of Texas Economics Professor, shared his findings on mortgage foreclosure trends since 2007. Overall, Liebowitz learned that sub-prime mortgage lenders are not the primary cause of current market conditions, and in essence, debunked the prevailing belief that these lenders tricked helpless borrowers into taking complex, low initial rate loans that eventually sky-rocketed. He noted that the focus on sub-primes ignores the widely available industry facts (reported by the Mortgage Bankers Association) that 51% of all foreclosed homes had prime loans, not sub-prime, and that the foreclosure rate for prime loans grew by 488% compared to a growth rate of 200% for sub-prime foreclosures. Liebowitz also found that interest-rate resets did not measurably increase foreclosures until the reset was greater than four percentage points. Only 8% of foreclosures had an interest rate increase of that much. In a nutshell, the overall impact of upward interest rate resets was much smaller than the impact from reduction in homeowners’ equity. The good news, according to Liebowitz, is the reduction in homeowners’ equity appears to be ending. He notes that housing prices are likely to stop falling soon. In turn, a perceived, and very real, end to the drop in housing prices will begin to stimulate further activity?as we are experiencing in the Chicago market.

6 July 2009 ? Today the mortgage backed bonds opened up 6bps. Right now we are currently down 6bps. The Dow is down 67 however, and that is not really giving any steam to a rally for the bond market. The mortgage backed bonds are at a resistance level as we have seen the rates trend down the past week. Trading remains slow after the long holiday weekend. The Dow has been pressured lower over concerns for the overall global economy recovery. It took a long time for the economy to get to where we are currently at and it will be a slow long grind to recover as with any recession. Unemployment reached a 26 year high for the US, and in Europe they are not faring much better. I encourage all homeowner?s to review their mortgage rate to see if they can take advantage of the 30 year fixed mortgage rates. Again, with many variables in pricing a mortgage a consumer should be around the 5% to 5.375% range. Some of the issues that affect your mortgage rate are your loan to value (LTV) of your home. Your credit score (which a 740+ is now what is required) and the type of home (single family versus condo or multi-unit property). For first-time buyers the rates have been extremely stable and hopefully with the first-time buyer credit of $8,000 you can purchase an affordable home with almost the same payment as your rent!

25 June 2009 ? Mortgage backed bonds opened up 19 this morning and continued to trend up to a positive 41! Mortgage Bonds may be rallying as the unemployment continues to rise with 15,000 more jobs lost than forecasted. Yesterday?s announcement by the FED that they will keep the Prime Rate close to zero (0) for the entire year and also continue to buy mortgage backed bonds came as no surprise. The government continues to buy mortgage backed bonds to help keep the mortgage rates at a consistent low level to attract first time buyers with low home prices and low mortgage rates. If you are considering buying and you currently own, meet with a seasoned mortgage consultant who can explain the rent versus own benefits. Right now many renters would be surprised that they can actually have the same payment if they buy a home as what they are paying rent! Mortgage interest and real estate taxes are deductible and if you are purchasing in Chicago there are other incentives.

The 30-year rate continues to trend down and is currently at 5.125%. Today?s tip of the day if you are going to take a 30-year mortgage with an average loan amount of $200,000 and you apply $95.00 extra per month to your mortgage payment this will save $40,000 of interest over the life of the loan and your mortgage will be paid off in 25 years!

So, you are facing foreclosure, and are worried and scared and don?t know what to do? Well, you are not alone. Millions of people nationwide have been foreclosed on or will be soon. There?s been all kinds of blame and finger-pointing (see my Who?s to Blame post for further info on that), but that’s not what this article is about. Something happened, and you got behind on your mortgage (and surely a lot of other things), and now you?re in a pickle.

What is foreclosure?

You Can Push Back on Foreclosures...Despite What You're Told

Foreclosure, or FC for short, is when a bank or lender takes steps to take your house away because you have not made the payments. You took out a loan, and for whatever reason fell behind on your payments, and the bank is trying to cut their losses by taking the house and selling it. It?s perfectly legal, and although it may appear that they are your nemesis, they aren?t necessarily the bad guys. I?m not taking the banks? side or defending them, I?m just telling you that they are in business to make money, like any business. Some time ago, you signed a promissory note saying you would send them a check every month, and for whatever reason, you couldn?t hold up your end of the bargain. I?m not here to judge; it happens to a lot of people, but if you don?t make your payments, they get to take your house. Maybe it?s not really your fault, and there were circumstances out of your control, but that?s just the way it is.

What is the Foreclosure Process?

I want to start off by saying don?t panic too soon. Some people think that if they are 15 or 30 days late on a payment, the hammer is going to get dropped on them, but this just isn?t so. Banks don?t want to foreclose on a house. Almost all of the time, they are going to lose money on a foreclosure. They would much rather get your monthly check and go about their business. Banks don?t want to take your house; they have to take it because they aren?t getting the money that was promised to them.

Typically, the foreclosure process doesn?t get started until the homeowner is 120 or 150 days past due. So, if you become 30 days past due, but keep sending in one payment every month, that is called a ?rolling 30?, and you honestly aren?t in any risk of foreclosure at that point, despite what the schmuck from the collections department is telling you. I have heard of times when a homeowner is 60 days down, and they offer up one month payment, but the lender refuses it. If you are 30 days down, they may take only one payment, but once you become 60 days delinquent, the answer is ?No, you cannot give us one payment, you now owe us two, and it?s two or nothing.? This one has always mystified me; it just doesn?t make sense. So, the moral is, if you can prevent becoming 60 days late by hook or crook, do it. I don?t want to throw out bank names for fear of getting sued for libel or slander, but some of the big names are guilty of this.

Try to See Trouble Coming Before It’s Too Late

If you had some unexpected expenses, and it looks like you might not be able to make a payment, but you are still working, and you aren?t late yet, and your credit is still OK, you can possibly refinance. There are programs out there for people who have current loans with Fannie Mae, Freddie Mac, or FHA that allow people to refinance with little or no equity. You do need to have a job, though. If it?s the end of May, and you don?t think you are going to be able to make you June payment, call to do a refinance NOW. Even if you can only lower your rate and payment just a little bit, you can likely skip one or two mortgage payments, maybe get an escrow refund, and have a new, lower payment. It may be just enough of a shot in the arm to keep out of trouble.

How Can I Fight Foreclosure?

So, 120 days passes. You get a knock on the door from the sheriff, or maybe a bonded messenger because there are too many being served for the sheriff?s department to handle. This can be a scary moment and very intimidating. ?Are you Joe Homeowner?? he asks. ?Umm, yes I am,? you reply. He hands you the envelope with court papers and your heart sinks. Maybe you want to cry. This would be one of the times that it is OK for a grown man to cry. After you are done sulking, inevitably you will say, ?What now?? That?s what I want to help with.

Sometimes the papers will have a court date already assigned. Most of the time, it will give you 30 days to file a response with the court. And then if a response hasn?t been filed (it will cost over $100 to file, by the way), the plaintiff (bank and their attorneys) will file for a default judgment of foreclosure because of a failure to respond, which you will get a copy of, along with the date and time of the court hearing. GO TO YOUR COURT HEARING. On your first time through, the judge will almost always grant another 28 or 30 days continuance to respond, but usually only once.

So what kind of ?responses? can you file? Well, I want to start off by saying that I am not an attorney, but I know what I know because I talk to a lot of people, and kind of know the ropes. Two of the most common, and most effective, are alleging RESPA violations, and requesting that the servicer, ?produce the note,? which I will get into shortly. There are many things that can count as RESPA (Real Estate Settlement Procedure Act) violations, many of them small technicalities, but enough to help your case. I can tell you from experience that most loan officers aren?t terribly detail orientated. This means there can be small mistakes on your paperwork you can use to your advantage. The documents you?d likely want to focus on are the Truth-in-Lending disclosure, the Good Faith Estimate, the Servicing Disclosure, and the HUD-1 Settlement Statement. If you are going to try this route, it may be wise to get an attorney, as they will know what mistakes are ?fatal blows? and which ones aren?t. These mistakes are more common than you might expect.

If you do nothing, a default judgment of foreclosure will be entered. With the judgment comes a 90 day ?redemption period?, meaning that you get 3 months to get caught up, should you win the lottery, get a big bonus, or maybe an inheritance. Assuming you haven?t gotten any windfall, after the 90 days is up, they can set a sale date for your house to be sold. They must give you a minimum of 60 days notice prior to the sale date. After the sale you have a minimum of 30 days after to get out, or risk being thrown out, which you really, really don?t want to happen. If the sheriff knocks on your door with an eviction order, you have about 15 minutes to get your bare essentials, and they change the locks, and put your stuff in storage, which you can pick up later. This is a very ugly scene you want to avoid. So, from the time you get papers, you should have a minimum of 7 or 8 months to get out (30 days to file a response, 30 days continuance, 90 days redemption, 60 days for sale, and 30 to eviction), and like I mentioned earlier, you don?t get papers until you are 4 or 5 months down, so you are probably looking at a year or more from the time you made your last payment until you have to get out. Another sad fact is that after foreclosure, many houses sit vacant for a year or more. There was even one non-profit agency advocating the evicted break back in and take back their house because it ?s better for the neighborhood to have an occupied house than a vacant house. Not that I?m recommending anybody do anything illegal, but if you resume residence, and can prove it (with utility bills and such), they have to go back through the whole eviction process again, even though the house isn?t yours anymore.

Produce the Note Defense

The other defense I like is the ?produce the note? strategy. As you probably know, your mortgage note can, and probably has, be sold one or more times. A common scenario is you close with mortgage company XYZ. Within the first month, they sell the servicing (who takes your checks) to mortgage company ABC. ABC might sell it again to mortgage company DEF. Now, theoretically, all the paperwork gets moved with the sale or transfer. But, in reality, many times it does not. And, even if it does get transferred, it may be lost, or may be stashed in a warehouse with tens of thousands of others, and very difficult to locate. There are a few steps to this process. First you have to mail a legal request to the lender and their attorney to ?produce the note,? and file this request with the county. After that you wait 30 days and file a ?motion to compel? asking the judge to order the bank to come up with the original promissory note. They then have 30 days to produce it. If this is done before the judgment of foreclosure, it may not make it to foreclosure. There was a story on TV about a lady who was basically living free for 2 years because the lender couldn?t come up with the note, and about a judge who threw out many foreclosures because of this. They have to prove you owe them the money. If you do this after the judgment has been entered, and the note is not produced, you may have to file an appeal, or a motion to vacate the judgment, or a motion for a stay on the sale and eviction. If the judge grants a stay until they can produce the note, you are still technically ?in foreclosure,? but your house won?t get sold, and you won?t be evicted. It?s sort of ?in limbo,? but it beats getting kicked out. And, if they do produce the note, you go back to the 60 days notice before sale, and another 30 to vacate, so it?s not like they can just come up and throw you out with no warning. There is a great site that details how to mount this defense, and has template forms you can fill in.  Again, you can probably do most of this on your own, but it?s not a bad idea to hire some legal help.

Loan Modification Can Help

One other option may be loan modification. This is where a lender agrees to modify the original loan terms to allow for you to stay in the home under new terms. These can be hard to get, and I have heard stories where a servicer has agreed to a modification over the phone, the homeowner has signed the papers and sent them in, but their house has gone into foreclosure or continues through the process in the meantime. The right hand may not know what the left hand is doing, so don?t put all of your proverbial eggs in the ?loan modification? basket, because the lender likely isn?t. You can try to make a loan mod go through, but don?t ignore the above advice either. It?s also noteworthy that above defensesw (produce the note and RESPA violations) can be used as leverage to force the bank into a modification.

Ownership Defense

Another option is called term ownership. It?s something between renting and owning, and relies on an obscure aspect of the law known as conditional ownership. A good description of the system can be found at www.termownership.com. Stephen Weeks is the attorney that developed this defense. I?ve corresponded with him a bit, and his a good guy, and very knowledgeable. He can be contacted at Weeks@WeeksLaird.com

Final Option: Bankruptcy

One last option is bankruptcy. There are two kinds of bankruptcy, or BK. One is a Chapter 13. This is where the court mandates a repayment plan over the course of 3 or 5 years, and all of your debt is included. You must prove the ability to repay for the court to approve a Chapter 13. And if you fail to make the required payments, the bankruptcy can be dismissed, and the foreclosure is back on. Most BK attorneys will give a free consultation to those interested in filing. Chapter 7 is where all of your ?unsecured? debt (credit cards, etc-not mortgages or car loans) is wiped out. You must be current on your mortgage if you plan on keeping your house, and there are very tight income requirements now (as opposed to a few years ago) for filing Chapter 7.

As you can see, there are several ways to help you fight foreclosure. I hope I?ve given you a better understanding of the process of foreclosure, and maybe some hope for those of you in trouble now. I also want to ask any of you who are behind on your mortgage or facing FC to take a hard, honest look at your situation. For many people, if you lost your job and have been out of work for several months, or had some sort of medical problem where you couldn?t work, but now are back on track, fighting to save your home may be a good idea. For some, if you are just in over your head, you have to ?know when to fold ?em?. Don?t let your emotional attachment to your house cloud your logic. Sure, you love your house. It?s your home. You have memories built there. But if you are making much less now than you were previously, or maybe just bit off more than you could chew, you might want to consider the steps here as a stall, so you can save up as much as possible so that when it comes time to move, you have money for a security deposit and all the other costs associated with moving, and be in a better position when it?s ?go time.? Yes, uprooting your life and you family to move to a new (and probably much smaller) place is no fun, but having to move with no money saved up and no plan in place is even worse.

I sincerely wish the best for anybody reading this. I know we are living in trying times right now.

We would like to thank redjar for sharing today’s photo via the Creative Commons License.

Drop After Drop Adds Up

In the first articles I showed how you can save energy and money and have a positive impact on the environment by going green and I showed how important an energy audit is for providing a road map to going green in your own home.

Now that I?ve laid some of the groundwork, most people want to know how to pay for it. My basic tenet is that there is a shade of green for every project and every budget?. Finding the right shade for your individual lifestyle and budget will mean some compromises along the way. But making the most of your energy audit is important. You only have the mental and physical fortitude to undergo disruption to your daily life so many times. So making the most of the time you devote to any home renovation project, green or otherwise, is critical.

In the US, the bulk of the homes that are currently being occupied were built during the housing boom of the 1970?s and 1980?s. These homes are nearing architectural and mechanical obsolescence. Also, these structures account for over 40% of energy consumption and 75% of electricity consumption annually. Can you imagine the impact to our economy if we could reduce those numbers by 10%? The way to do that is to renovate existing buildings, starting with residences.

Let’s Assume You Aren’t Rich and Want to Go Green

I’m going to assume that the family interested in going green does not have the cash available to pay for all the costs of an energy efficiency renovation all at once. You don?t want to use a credit card to finance the purchase, as the interest that you would pay makes the entire process much more costly than needed. So where can you turn?

There are federal and state programs available to help offset the costs of going green. There are local incentives, grants, and rebate programs available to help people achieve energy efficiency improvements, and there are various types of lending programs, from home equity loans to personal lines of credit available form many different sources that are specifically geared to the energy efficiency market. I will give you the ?get started? information to help you find the right program for you.

Federal Resources for Helping to Pay for Going Green

At the federal level, the American Recovery and Revitalization Act (ARRA) passed on February 17, 2009 included billions of dollars in stimulus funds for energy efficiency improvements. Chief among these are the federal tax credits that are available to take for energy efficiency upgrades to your own home for 2009 and 2010 tax years. In summary, the federal government will repay you up to $1500 (previously limited to $750) of the costs of energy efficiency improvements for windows and doors, roofing material, water heaters, insulation, and biomass stoves. In addition, the federal government will pay for 30% of the installed costs of renewable energy upgrades like solar power, geothermal heating and cooling, solar hot water heating, small wind energy systems, and fuel cell technology. Previously the allowable tax credit was capped at $2000. Now, it is uncapped, so they will pay for a full 30% of the costs!

Builders, developers, and commercial property owners can take advantage of these credits as well, but in this care they are based on square footage, not on costs. See the IRS website or the above link for the details.

State-based Resources for Going Green

In addition to the rebates available from the federal government, there are programs from the state that are available to offset costs of energy efficiency improvements. If you visit DSIRE (Database of State Initiatives for Renewables and Efficiency), you can click on any state and find out what rebates and incentives are available. For the Chicago area, the state will rebate up to 30% of the costs of solar power installations. The program is administered through the Illinois Department of Commerce and funded through the Illinois Renewable Energy Trust Fund. The current plan expired on May 1, 2009, but the next round of funding will begin July 1, 2009. The city of Chicago also encourages green building and will fast-track permits and waive up to $25,000 in fees for green certified projects.

For those of you in Wisconsin, you hit the jackpot! There is a fantastic program available for renewable energy and efficiency upgrades called Focus on Energy. This program will offset costs for a host of renewable energy products up to 25% of costs or a maximum of $35,000. Its current funding expires June 30, 2009, but will renew.

Energy Companies Help You Go Green

Grants and rebates are available from the utility companies as well. People’s Gas and NorthShore Gas both have rebate programs that they have extended until October 31, 2009. This program will cover costs of insulation up to $750, clothes washers up to $100, water heaters up to $75 – $400, gas furnaces up to $450, and gas boilers up to $600. It requires professional installation of everything, and you can apply for the rebate online.

ComEd does not have as much of a program available. They will sell you discounted CFL bulbs, can help arrange a home energy audit, and can set up electricity cycling programs for you. Also, they will pay you $25 to recycle that old refrigerator that you plan on replacing with a new, EnergyStar® model.

For those of you in southern Illinois or some of the western suburbs, Ameren has a different set of programs, much better than ComEd. They will help with heating, air-conditioning, lighting, and with the home energy audit, as well as refrigerator recycling.

How About Weatherization Help?

Now, for funding of weatherization improvements, the Illinois Home Weatherization Assistance Program is the place to start. On their web site you will be able to locate local programs. This is geared to low income families, but the information available is good, and at the very least, you can get a good contractor to help with your project. This is funded through the Department of Energy and the money is given to each state to distribute through its weatherization programs. This program will also cover the cost of the home energy audit in some cases.

Can I Get a Loan To Go Green?

The last topic I want to cover is funding though loans. The Department of Housing and Urban Development administers a huge number of programs that are designed to help average Americans finance, refinance, or improve their homes. There are a few income and home value limits, but a vast majority of Americans will fit into its broad criteria.

First, there is the Energy Efficiency Mortgage (EEM) which is a stand-alone product available to help cover the costs of home efficiency improvements. The maximum amount is 5% of the home?s value not to exceed $8000. Now, this may not seem like much, but the beauty of this program is that it can be added to any other FHA/HUD program without penalizing the owner/purchaser on the percentage of loan to value. So, say you want to borrow $250,000 to buy and renovate a home (or refinance an existing home). Though this program you can borrow $258,000 even if that additional $8000 would push your loan over the maximum loan to value. It?s a ?free? $8000 to use for energy efficiency upgrades.

Where this really works out is with the 203k loan program which is designed to encourage purchasers to either renovate their existing home or renovate a home they intend to purchase and live in. (See this previous The Chicago 77 post for more details.) The beauty of this program is that it looks at the value of the home as completed after the renovation, not the value at the time of purchase. The program will help pay for design, inspection, and the energy audit, as well as all the construction. Click here to see a visual overview of this program. There is also a limited repair program that provides $35,000 for home improvements to a home purchased. This additional $35,000 becomes part of the mortgage, allowing the buyer to do significant work to a home before moving in and paying for it over the life of the mortgage.

Fannie Mae also has innovative programs for renovation/purchase of single family homes.  This is called a HomePath® program. There is another program called HomeStyle®

Freddie Mac has a similar array of programs. The best bet is to contact an FHA/HUD approved lender to determine the best program for your situation.

In the more commercial market, Wells Fargo Bank has a variety of loan programs available that are geared toward energy efficiency and green living. There are others, but Wells Fargo seems to have the most developed program. The idea for all of these programs is that the lenders know that you will be saving significant amounts of money in utility costs and reward you with either a larger amount available to borrow based on your credit score, or a discount on the rate you are borrowing at.

That about covers what I know regarding funding, financing, rebates, and rewards for energy efficiency improvements.

For those who are immediately interested in upgrading their home, purchasing a new home, or renovating an existing home, make sure to read by bio below for ways I can help.

My thanks to Brad Walbrun for providing some background material on the 203k-mortgage program.

Going Green Series

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6 May 2009 – Stocks have crept upward this week, with the Dow being above 8,400 Wednesday morning. Tuesday and Wednesday mortgage rates have inched downward very slightly.

Did you know? 1) For quite some time now, conforming and FHA fixed rates have been as good, or even better than, adjustable rates. 2) Many parts of McHenry, Lake, Kane, Will, and Grundy counties qualify for USDA loans, which set up its guidelines for ?rural? communities over 20 years ago, and hasn?t updated them since.