Q: What software can do the calculations for these types of mortgages?
A: The national group that works with the various stakeholders on Energy Efficiency is the Residential Energy Services Network, RESNET.
RESNET approved Software packages are available through a network of Rating Providers. These Rating Providers perform QA on all Certified HERS Ratings.
There are currently three software programs accepted by RESNET for HERS Ratings. They are used across the US for Energy Efficient or Energy Improvement Mortgages.
• Energy Gauge
• Energy Insights
• Rem Rate
• The Kansas Energy Office has designated Rem Rate for use in state operated weatherization and efficiency programs.
Q: How much money could be available to increase a loan amount for Efficient Improvements?
A: Amounts vary with the program. The EEM and EIM is recognized and provided for by the F.H.A. with both Fannie Mae and Freddie Mac; it is also available for VA loans.
Q: How is it determined which improvements qualify for this type of loan and how much is allowed for various items.
A: The house under consideration is treated as one system. If it is insulated with very high R-Value insulation, it requires a smaller furnace and air conditioner. The differences in each house can be accounted for through the application of a certified Energy Audit and software. The audit determines the actual amount of various energy efficient features, such as insulation, solar orientation, HVAC equipment, and other items. There are diagnostic pressure tests run that determine the leakage in the building shell (to measure the possibility of cold drafts in the winter) and the supply and return ducts. These are entered into the software for a rating.
The features are then adjusted to account for improvements in the various features, along with estimated costs for each. The computer results show the cost of that improvement and the resulting savings. The improvements are then ranked according to payback time.
During the past week, I’ve had several questions about HERS Ratings and Mortgages. I thought I would put up some of those answers in posts this week. Something fun to do while I do my Combustion Appliance Class.
Q: What can an Energy Efficient Mortgage Do?
A: An Energy Efficient Mortgage (EEM) allows the lending agency to allow a larger amount to be loaned to the buyer. It is allowed because the efficiency results in lower costs for utilities. The decreased cost of utility payments enables a home buyer to afford an increase in P&I payments, and many times leaves savings available to the home owner for other expenses.
One example of an Energy Efficient House would be one that was built to Energy Star Standards. An Energy Star House should be worth more, than an otherwise comparable home, at re-sale time.
Another example would be where the homeowner had upgraded various energy efficient features over the years. This improved house should be worth more because the homeowner installed a 92 or 94 AFUE Furnace instead of a 78 or 80 AFUE furnace. Other energy efficient items could be insulation, triple pane windows, a tank less hot water heater, an Energy Recovery Ventilation System and/or others.
Q: What is the difference between an Energy Efficient Mortgage (EEM) and an Energy Improvement Mortgage, (EIM)?
The EEM is designed for a home that was originally built to a higher efficiency status or one that has been upgraded to the efficient status prior to the time of sale.
The EIM is for the home that requires improvement to the energy efficient features. In the case of an EIM the lender places the additional amount of loan proceeds in escrow. The improvements are implemented and the contractors are paid from the escrow. Any amount remaining after all bills are paid is used to pay down the principal.
Looking at Energy Generation, this graphic shows the cost to provide new electrical power. By far the least expensive is to provide Energy Efficiency in our existing buildings. Less than half the cost to create available electricity by not using, then wind or solar or any of the fueled sources.
Remember the old cliche – “A Penny Saved, is a Penny Earned”. This is a good example of that thought in action. It is timely and cost effective.
If you could improve your house or commercial building by spending $1000.00 and save that much on your energy bills over 5 years – what is the rate of interest on that investment?
An energy audit, with a computer model of your home’s energy use would provide some specific examples of which improvement(s) would be cost effective for your house.
Elisa Wood writes on her Blog about Energy Efficiency in existing housing. She has a report on this covering countries around the world, not just the U.S.
The report again has some numbers showing how improving the energy efficiency of existing homes, is the best approach to decreasing energy use for the dollar. Building new electrical generation units is expensive. You can build coal, nuclear, wind, solar, all cost between 9 – 12 cents per KWH of capacity. Improving energy efficiency in homes costs about 4 cents to provide that KWH of capacity.
The best part is what you don’t get from the electric company, keeps money in your pocket. The question then becomes: “How Do I Determine which improvements are best for my house?”
You need to consider an Energy Audit from a Certified Auditor. You will get a computer modeled Energy Efficiency Plan, specific to your house, showing the cost savings for each proposed improvement.
A Certified Energy Auditor can help you access financing. In Kansas that is the Efficiency Kansas Program or a VA, FHA approved Energy Improvement Loan. Start with an Annualized Utility Analysis. Find out how your house is doing. Details on the Contact Page of the Website.
For Ms. Wood’s article see:
I found this article about the various claims for being eco-friendly or green on various products. I have always tried to watch the various advertising claims made for the items I see on store shelves. The Green Revolution has stormed our televisions, and store shelves lately with various claims to be green, or eco-friendly, or environmentally conscious or sustainable. What do these claims really mean? Is there a standard by which they can be measured?
Someone steps up to this plate. Take a look at this new website:
Happy Birthday! USA! You’ve had some good years! You will have a few more! I am proud to have celebrated a few with you.
EES wishes everyone a safe and Happy Independence Day. May the day be warm as our hearts are! May the fireworks stay in the sky with their beauty! May all of us rededicate ourselves to doing what we do that makes this country great!