Category Archives: Mortgage

NAHB and Greening the MLS

I receive an email news letter each Friday as a member of Wichita Area Builders Association and NAHB, the local and national Builders Trade Groups.  This is titled Monday Morning Briefing.  There are usually 8 to 10 concise articles of interest to the residential building industry. NAHB has an outstanding Research Arm.  Every time they post something they have researched, I learn something.

Some of these posts are self-promotional.  I don’t blame them. They work hard and deserve to put that hard work out for everyone to know about.

In this case, the article that caught my attention relates to work the NAHB has done with other industry trade groups to advance the shared knowledge for builders, buyers, real estate agents, appraisers and others.  Everyone in the home sales transaction benefits from common, verified sources of information about specific homes.

Here is the actual article.  Thank You! NAHB!


You have an Energy Star New Home – How accurate are the Projections?

This study is of interest to all HVAC, Insulation Contractors. It is also important to Home Owners.  An Energy Audit makes recommendations and projects cost effectiveness based on a computer model of the Energy Use in each specific home.

How much can you count on those projections? Home Energy Usage depends on three things!

  • First:  The Weather!
  • Second: The Lifestyle of the Family in the Home!
  • Third: The construction of the Home!

Mother Nature has control of the weather! Lifestyle is the difference between having 3 High School Football Players in the family, or 3 High School Cheerleaders.  Energy use will be different. Then what happens to the use when those kids go off to college.

This study actually compares the projections from several hundreds of thousands of homes to their actual usage.  You can read the RESNET Summary. You can read the report itself. I have reprinted the Summary with the link to the Report below.

The original Summary can be read here.

My conclusions:

  • The correlation from projected usage to measured usage over time justifies the reliance on computer modeling using the software to guide your decisions on prioritizing improvements in energy efficiency to your existing home.
  • The correlation of projections for Energy Star New Homes to actual usage gives Builders, Contractors and Home Buyers the confidence to use an Energy Star New Home Certification for lowering the ongoing Operating Costs for Energy in a New Home Purchase.

John Nicholas



Posted by RESNET under RESNET News

Over the years, there have been discussions over how accurate are home energy ratings in predicting the energy use of rated homes. To enhance the discussion of the accuracy of home energy ratings’ energy use projections it would be good to review a study conducted and published by Advanced Energy on a large set of homes in Houston, Texas. The authors of the study were Michael Blasnik of M. Blasnik & Associates and Shaun Hassel and Benjamin Hannas of Advanced Energy. The objective of the U.S. Environmental Protection Agency supported “Houston Energy Efficiency Study” was to assess the actual energy use of groups of homes built to different energy efficiency specifications in Metropolitan Houston – typical non-program (baseline) homes, ENERGY STAR® homes labeled by a Home Energy Rating and guaranteed performance homes.

More than 226,000 homes built from 2002 through 2007 by dozens of different production builders were included in this study. The large dataset also provided the opportunity to analyze how certain construction characteristics are related to actual energy usage. Data collected for this project included billing data for all new homes built in the CenterPoint utility service territory from 2002 through 2007, information from property assessor databases of four counties, detailed building characteristics for tens of thousands of ENERGY STAR homes from CenterPoint’s ENERGY STAR Homes tracking database, and detailed data files from energy raters including the home energy rating software tool, REM/Rate, input files and building shell and duct leakage test data. The study did not involve any direct data collection in the field but instead relied upon existing data sources.

This approach allowed the scope of the study to be much larger in terms of the number of homes analyzed but left some gaps in our understanding of some details, especially of baseline homes. The overall dataset includes hundreds of variables for 226,873 homes, including 114,035 potential baseline homes, 106,197 ENERGY STAR homes and 6,641 guaranteed performance homes.

Although consumption differences across groups of homes are smaller than advertised, ENERGY STAR homes perform very close to the predictions of the models on average, while baseline homes perform better than the reference homes defined by the HERS standard. ENERGY STAR uses a base case reference home defined as minimum local code specifications combined with the least efficient cooling, heating and hot water systems available, a leaky building envelope and a poor duct system. Using this yardstick to measure the performance of the ENERGY STAR houses in the study, they did quite well – showing a strong and fairly consistent relationship between actual and projected performance for both heating and cooling. Therefore the apparent lack of savings is attributable not to underperformance by the ENERGY STAR homes but to the fact that the baseline houses in Houston perform considerably better than the ENERGY STAR reference house.

The relationship between REM/Rate cooling load projections and actual electric usage was examined graphically and statistically for 10,258 homes with sufficient data. REM/Rate projected an average cooling load of 5,506 kWh/yr while the billing analysis estimated average cooling loads at 5,677 kWh/yr, about 3 percent higher – excellent overall agreement. Although the analysis found no systematic bias in the REM/rate cooling projections, there was a large amount of variability in the data. Findings revealed that the correlation was higher between house size and cooling load than between REM/Rate projected cooling load and actual usage. However, the study team feels confident in stating that when using current modeling software with energy-efficient new homes, there is a strong and fairly consistent relationship between actual and projected performance using REM/Rate for both heating and cooling. REM/Rate also estimated the average heating usage of program homes fairly well – only 4 percent lower than the measured loads.

To download the study click on Houston Energy Efficiency Study

Energy Efficient Mortgages

Ray Hall has been doing efficient energy work in California for many years. Here is a link to his video on Energy Efficient Mortgages.

These can be FHA, VA or Conventional types. They allow the cost, of qualified energy improvements, such as additional insulation, other improvements to the building shell and newer more efficient heating and cooling systems, to the mortgage amount. This applies to your first loan on the property or a refinancing loan. The concept of a qualified energy improvement is one that shows enough cost savings to support the additional cost of the mortgage payment.

If you qualify for a loan, you probably qualify for an Energy Efficient Mortgage.

See what Ray Hall has to say in the video. Ask your mortgage lender about an Energy Efficient Mortgage. Efficient Energy Savers can provide the audit and the calculations for the EEM.

Here is the link to

Energy Mortgages Part V

Q: What are the bid requirements for improvements made from an Energy Improvement Mortgage?

A: While competition between vendors can result in a cost savings for the consumer, there are no specific requirements to use a bid process or to take the low bid. A consumer may choose to obtain only one price on a recommended improvement, or to issue a Request for Proposal to more than one contractor.

Competition is also available for HERS Ratings Services. Some Raters work for a contractor, some work independently. Using a Rater that is employed by a contractor may or may not reduce the choice you have in selecting contractors for that specialty. An independent Certified HERS Rater does not have a financial incentive to limit your choice in contractors. All Certified HERS Raters will provide a RESNET Standard Disclosure concerning payment for services, employment, and the products or services, if any, they or their employer can supply or install.

Q: Which homes are not candidates for an Energy Mortgage.

A: A home originally built to the Energy Star Standard should be financed with an Energy Efficient Loan. This home has a HERS Rating and is efficient. The Seller should receive credit on the price of the home for the energy efficiency built into the home.

A home that needs energy efficient upgrades is a great candidate for an Energy Improvement Loan. The cost of the improvements can be included in the mortgage and the cost savings covers the increased cost and may allow the new home owner an extra cushion.

Any home the buyer would like to improve would be a candidate for an Energy Improvement Loan. For example: An Energy Star Rated Home is listed four years after construction. A potential buyer is interested in adding a renewable energy source. This home with a HERS Rating of 82 in 2006, would be a candidate for a new Audit and an Energy Improvement Loan to cover the cost of a renewable energy source.

Q: How do I determine if a home was built to Energy Star Standards.

A: The seller will probably share the information with you. They would be thinking of this rating as an added selling feature. If not, check the Circuit Breaker Box. A HERS Rating Label is usually placed on the box, by the original Rater. This would also demonstrate an older home that had been audited and improved after construction.

Q: How would a homeowner, or realtor determine if a home without a HERS Rating Label is worth the time investment to pursue an Energy Improvement Loan. Is there an age, or amount of insulation, or other indicator?

A: The best indicator for an existing home’s need for an energy improvement loan would be to obtain an Annual Utility Usage Analysis. The seller can obtain from his records or from the utility company the past twelve months of usage and amounts from both electricity and gas or propane, a certified HERS Rater can apply the Analysis and the amount of use could be pinpointed.

Energy Mortgages Part IV

Q: What training is required for certification as a HERS Rater?

A: The written standards are available on the RESNET website. Training includes principals of thermodynamics; evaluation of purchased energy amounts and usage; evaluation of building components such as walls, ceilings, roof, floors, fenestrations (doors, windows, skylights), crawl space and basements, ventilation standards, HVAC equipment efficiency determinations, and other types of building science. Diagnostic Testing includes Air Pressure Testing of the building using a Blower Door, and pressure testing of ductwork using a duct fan.

Q: Are there other National Organizations that can offer the type of HERS Rating required by Lenders?

A: RESNET is the national organization for certifying a standardized HERS Rating accepted by the Home Mortgage Industry, the IRS, the DOE and the EPA.

Representatives from the National Association of State Energy Offices and the Home Mortgage Industry formed RESNET in 1995 to standardize energy measurements and energy improvements to homes. Prior efforts had resulted in varied programs in some states and not others, and some municipalities.

Q: How is an improvement to a home calculated by the software as a cost effective improvement?

A: The software compares the projected cost of the improvement to the calculated annual cost savings. If the cost of installation and materials result in a favorable rate of savings in energy cost, the improvement is generally recommended. For example, the cost of $2,000.00 to insulate the walls of a 1960 era home and add insulation to the attic resulting in R-13 in the walls and R-50 in the attic could show an $800.00 savings annually. This shows a payback of the improvement in 30 months. Many simple improvements such as insulation, shell sealing, installation or replacement of weather stripping can show immediate results. After calculating these changes, it may become cost effective to replace the HVAC equipment with newer more efficient models that are correctly sized for the improved house.

Energy Mortgages Part III

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.

Energy Mortgages Part II

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.

Home Energy Audits and Mortgages Part 1

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.