CopyCache ID: 111885 Meta Title: FHA PowerSaver program helps wityh green improvements Meta Keywords: FHA,

HUD, home loan, mortgages, home equity loan Meta Description: FHA PowerSaver program can help you finance energy efficient home improvements Leader: With the Fannie-and Freddie-induced curtailment of the PACE program for financing energy improvements, homeowners have fewer options for improving their properties. FHA's pilot PowerSaver program, which provides up to $25,000per home for approved energy efficient enhancements, should take up some of the slack. Here's what you need to know to take advantage of this new program.

Power to the people: Improve your home with FHA's new PowerSaver program
HUD expects this new program to help 30,000 homeowners and create 3,000 jobs for builders and contractors. There may be additional benefit to communities as well. Dan Keller, Seattle FHA mortgage banker, says, "I think this program may help homeowners improve their homes, adding to the pre-housing crash 'pride of home ownership mentality' along with rehabilitating and improving local housing communities affected by foreclosures." Homes and homeowners must meet eligibility guidelines. The home must be a one-unit, detached property, used as your primary residence. You must have a credit score of 660 or better, and your debt-to-income ratio can't exceed 45%. You cannot have a bankruptcy or foreclosure in your past, and you must not have been late with your mortgage payment (by 30 or more days) more than once in the last twelve months. These guidelines are a bit stricter than FHA-insured first mortgages because second mortgages are considered riskier to lenders. What improvements can you make? Ideally, you'll choose improvements that save enough energy to cover or substantially offset your payment, increase your home's equity, or both. The funds can be used to finance any of a number of eligible projects, including installation of Energy Star rated replacement windows, insulation, energy-efficient doors, HVAC systems and water heaters, solar panels, duct sealing and geothermal systems. What's the cost?

HUD says that it expects the loan's cost to be a major selling point. In its FAQs for Consumers, the agency states: PowerSaver loans will be less expensive and easier to access than other kinds of financing for home improvements, such as credit cards and home equity loans. This is because FHA is providing mortgage insurance and other incentives to lenders to lower costs for homeowners. FHA does not set the program's mortgage rates; that's done by lenders competing for business. However, the presence of FHA mortgage insurance does lower the risk to lenders, making the loans more attractive to originate and keeping rates down. In addition to the interest, there is an annual mortgage insurance premium of 1% of the loan amount. The loan amortization takes place over a 15- to 20-year period, depending on the type of improvements chosen. There is no prepayment penalty and, because the funds are funneled into home improvement projects, the interest is tax-deductible for those who itemize. How is getting a PowerSaver loan different? Unlike other FHA loans, only an exterior inspection is required instead of a full appraisal. This reduces the cost of taking out a PowerSaver loan. Parties who profit from your improvement, like your builder or contractor, are allowed to pay for discount points, which would lower your home equity loan's interest rate. Your costs may be financed into your new loan if you have enough home equity.FHA strongly encourages a home energy audit prior to beginning a PowerSaver project. It can locate areas of potential savings and help you make the best choices in home improvements. PowerSaver loans are not for underwater homeowners. The combined total of the new PowerSaver loan plus the current first mortgage cannot exceed the appraised value of the property (the appraisal does include the added value of the prospective improvements). Where can you find a PowerSaver lender? The Powersaver is in its early stages, and will run as a pilot program for two years. Initially, eighteen lenders have been authorized to offer the PowerSaver loan as part of the pilot.FHA mortgage blogger John Burke says it defeats the purpose of the program when it isn't widely available. "The PowerSaver program simply it isn't offered on a wide scale," he says, "As of the April 21st, there are only 18 participating lenders and in my mind that's a problem. If you really want to help homeowners, don't restrict programs like this to only a handful of lenders." HUD says it limits the program to a few lenders initially because it wants to give the pilot the best chance of succeeding. The chosen FHA lenders meet several requirements, including a track record with similar lending initiatives, adequate computer systems and audit capabilities, and the demonstrated ability to work collaboratively with public sector agencies. The first eighteen lenders are:

* Admirals Bank * AFC First Financial Corporation * Bank of Colorado * City of Boise, Idaho * Energy Finance Solutions * Enterprise Cascadia * HomeStreet Bank * Neighbor's Financial Corporation * Paramount Equity Mortgage, Inc. * Quicken Loans * SOFCU Community Credit Union * Stonegate Mortgage Corporation * Sun West Mortgage Company, Inc. * The Bank at Broadmoor * University of Virginia Community Credit Union, Inc. * Viewtech Financial Services, Inc. * WinTrust Mortgage * W. J. Bradley Mortgage Capital Corporation Other programs offered by a larger number of lenders include FHA Energy-Efficient Mortgages (EEMS) and 203(k) rehabilitation loans. With the huge variety of homeowner financial positions and needs, additional financing options can help increase the number of home energy improvements nationwide. For many homeowners and communities, the PowerSaver loan may offer the most appealing choice. Gina Pogol Gina Pogol has been writing about mortgage and finance since 1994. In addition to a decade in mortgage lending, she has worked as a business credit systems consultant for Experian and as an accountant for Deloitte. She graduated with High Distinction from the University of Nevada with a BS in Financial Management. Industry fact sheet http://portal.hud.gov/ http://portal.hud.gov/hudportal/documents/huddoc?id=DOC_12645.pdf http://Interview, Dan Keller http://Interview, John Burke FAQs for comsumers http://portal.hud.gov http://portal.hud.gov/hudportal/documents/huddoc?id=DOC_12643.pdf