Blog – Page 71 of 866 – Mike Pfefferman

30

May

Home Mortgage

Energy Efficient Mortgage (EEM) Programs – The Green Loan

Are you dreaming of owning a home that not only suits your lifestyle but also helps you save on energy bills? Well, it might sound like a dream, but with Energy Efficient Mortgage (EEM) programs, it’s entirely within reach. We will discuss the world of EEMs, exploring what they are, how they work, and how they can benefit both homeowners and the environment.

What is an Energy Efficient Mortgage (EEM)?

An Energy Efficient Mortgage is a home loan that allows homebuyers to finance energy-saving improvements as part of the mortgage and is at times referred to as “The Green Loan”. These improvements could include installing energy-efficient appliances, upgrading insulation, or integrating renewable energy systems like solar panels. Essentially, an EEM empowers homeowners to make their homes more energy-efficient without the need for significant upfront costs.

How Does an EEM Work?

Unlike traditional mortgages, where you secure financing solely for the purchase of the home, an EEM takes into account the potential energy savings that result from energy-efficient upgrades. Lenders calculate the anticipated energy savings and incorporate them into the loan amount, enabling borrowers to finance both the purchase price of the home and the cost of the improvements.

Benefits of Energy-Efficient Mortgages

1. Cost Savings

One of the most significant advantages of EEMs is the long-term cost savings they offer. By investing in energy-efficient upgrades, homeowners can significantly reduce their utility bills over time, offsetting the initial investment and potentially saving thousands of dollars over the life of the mortgage.

2. Increased Comfort

Energy-efficient improvements not only save money but also enhance the comfort and livability of a home. Better insulation, high-efficiency heating and cooling systems, and improved air quality contribute to a more comfortable indoor environment, ensuring that homeowners enjoy their living spaces to the fullest.

3. Environmental Impact

Reducing energy consumption isn’t just about saving money—it’s also about reducing our environmental footprint. EEMs promote sustainability by incentivizing homeowners to adopt eco-friendly practices and technologies, ultimately helping to mitigate climate change and preserve natural resources.

Who Qualifies for an EEM?

While eligibility criteria may vary depending on the lender and the specific EEM program, most borrowers must meet certain requirements to qualify for an Energy Efficient Mortgage. These typically include:

· The property must meet minimum energy efficiency standards.

· Borrowers must demonstrate the ability to repay the loan.

· Energy-saving improvements must be cost-effective and feasible.

· Homeowners may need to undergo a home energy assessment to determine the most suitable upgrades.

Exploring Available EEM Programs

Several EEM programs are available to homebuyers, including those offered by government agencies such as the Federal Housing Administration (FHA), the Department of Veterans Affairs (VA), and the U.S. Department of Agriculture (USDA). Additionally, many conventional lenders offer their own EEM products, each with its own set of terms and conditions.

Tips for Maximizing the Benefits of an EEM

Conduct a Home Energy Audit: Before applying for an EEM, consider scheduling a home energy audit to identify areas where energy efficiency improvements can yield the most significant savings.

Research Available Programs: Take the time to explore the various EEM programs available to determine which option best suits your needs and financial situation.

Work with Experienced Professionals: When undertaking energy-efficient upgrades, enlist the help of qualified contractors and energy experts to ensure that the improvements are implemented correctly and effectively.

Consider Long-Term Savings: While upfront costs may seem daunting, remember that energy-efficient improvements offer long-term savings that can outweigh the initial investment.

Energy Efficient Mortgages offer a unique opportunity for homebuyers to invest in both their financial future and the future of the planet. By incentivizing energy-saving upgrades, EEMs empower homeowners to enjoy greater comfort, lower utility bills, and a reduced environmental impact.

29

May

By Mike Pfefferman

Mortgage

Understanding The Advantages and Risks Of Wraparound Mortgages

These days real estate transactions have become more and more creative with financing solutions that often emerge to meet the diverse needs of buyers and sellers. One such alternative is the wraparound mortgage, a financial instrument that has gotten both praise and caution within the real estate community. Understanding its advantages and risks is crucial for anyone considering this option.

What is a Wraparound Mortgage?

A wraparound mortgage, also known as an all-inclusive mortgage or simply a “wrap,” is a type of secondary financing arrangement where the seller assumes the existing mortgage and creates a new mortgage with terms that encompass both the existing loan and additional financing provided by the seller. In essence, the seller becomes the lender for the buyer, who makes payments directly to them.

Advantages of Wraparound Mortgages

1. Flexibility for Buyers

Accessible Financing: Wraparound mortgages can offer financing to buyers who may not qualify for traditional loans due to credit issues or insufficient down payments.

Negotiable Terms: Buyers and sellers have the flexibility to negotiate terms such as interest rates, repayment schedules, and down payment requirements, providing opportunities for mutually beneficial agreements.

2. Simplified Transactions

Streamlined Closing Process: Wraparound mortgages can facilitate faster transactions since they often involve fewer parties and less stringent underwriting requirements compared to conventional loans.

Reduced Closing Costs: Buyers may benefit from lower closing costs since they are not acquiring a new mortgage from a traditional lender.

3. Income Generation for Sellers

Continued Cash Flow: Sellers receive ongoing income in the form of mortgage payments from the buyer, which can provide a steady stream of passive income.

Higher Sales Price: Sellers can potentially command a higher selling price by offering financing options, attracting buyers who value the convenience and flexibility of a wraparound mortgage.

Risks Associated with Wraparound Mortgages

1. Default Risk

Potential for Default: If the buyer fails to make payments on the wraparound mortgage, the seller may face the risk of foreclosure or be required to cover the outstanding balance on the underlying loan.

Complex Foreclosure Process: Foreclosing on a wraparound mortgage can be more complicated than traditional foreclosures, potentially leading to delays and legal expenses for the seller.

2. Due-on-Sale Clause

Violation of Mortgage Terms: Most traditional mortgages include a due-on-sale clause, which allows the lender to demand full repayment of the loan if the property is sold. Engaging in a wraparound mortgage without the lender’s consent could trigger this clause, resulting in accelerated repayment.

3. Title Risks

Clouded Title: Since the original mortgage remains in the seller’s name, there is a risk of title issues arising if the seller fails to pay the underlying mortgage or encounters legal troubles.

Lien Priority Concerns: In the event of default or foreclosure, the wraparound mortgage may not have priority over other liens or claims against the property, potentially leaving both parties vulnerable to financial loss.

Wraparound mortgages offer a flexible financing option for buyers and income-generating opportunities for sellers, but they also entail significant risks that warrant careful consideration. Before entering into such an agreement, both parties should conduct thorough due diligence, consult legal and financial professionals, and clearly outline the terms and responsibilities involved.

As with any financial arrangement, transparency, communication, and prudent decision-making are essential to mitigate risks and ensure a successful outcome for all parties involved. Whether you’re a buyer seeking alternative financing or a seller exploring creative selling strategies, understanding the advantages and risks of wraparound mortgages is essential for making informed decisions in the complex world of real estate transactions.

28

May

By Mike Pfefferman

Financial Reports

What’s Ahead For Mortgage Rates This Week – May 28th, 2024

The Consumer Sentiment Report was the sole important report to take place the prior week, keeping with the trend of the cooling-off period that happens the weeks following the CPI and PPI data releases.

Consumer sentiment this time around has come to be slightly below expectations and falling to a 6-month low, marking a great change in overall sentiment towards the clear trend in rising costs in goods and services. It is largely expected that the Federal Reserve, even with the recent improvement in data, will maintain its stance at holding rates at the current position until a later date this year.

Consumer Price Index

A monthly gauge of U.S. consumer sentiment fell to its lowest level in six months in May on expectations of higher inflation, according to a survey released Friday. The second of two readings of the consumer-sentiment index was 69.1 in May, a sharp decline from 77.2 in April, the University of Michigan said. The final reading was slightly higher than the initial estimate of 67.4.

Primary Mortgage Market Survey Index

15-Yr FRM rates are seeing a decrease by -0.04% with the current rate at 6.24%
30-Yr FRM rates are seeing a decrease by -0.08% with the current rate at 6.94%

MND Rate Index

30-Yr FHA rates are seeing an increase by 0.08% for this week. Current rates at 6.70%
30-Yr VA rates are seeing an increase by 0.08% for this week. Current rates at 6.72%

Jobless Claims

Initial Claims were reported to be 215,000 compared to the expected claims of 220,000. The prior week landed at 223,000.

What’s Ahead

Next week is the Federal Reserve’s preferred inflation metric PCE Index Prices, but the more impactful metric has largely always been the CPI and PPI reports. There will also be the release of the Chicago PMI report which will headline manufacturing data and the current state of the manufacturing industry. Tailing up the two major reports is the Federal Reserve’s beige book.