Building energy efficient homes and improving energy efficiency in our homes can increase their value.
Over the past few years, there has been a ground swell of Green building interest by home buyers and builders. In response to the growing demand to conserve energy in our homes, there are several new mortgage programs that allow home buyers to finance the cost of energy improvements into their mortgage, to increase their loan-to-value, or improve their qualifying ratios. Some of the more common improvements that are used to make homes more energy efficient include the addition of new windows, high efficiency heating/cooling systems, and improved insulation. All of these contribute to reduced energy use, and also to making homes quieter, more comfortable, and more desirable.
These programs allow buyers to purchase a more expensive home that has a lower cost of ownership to offset the larger mortgage payment. There are 2 types of financing options available
that cover a variety of scenarios for energy efficient homes.
? Energy Efficient Mortgages (EEM’s) allow borrowers to qualify for a larger loan, using expanded income ratios, sometimes with the same down payment.
? Energy Improvement Mortgages (EIM’s) allow borrowers to include in the mortgage the cost of making an existing home more energy efficient, when they refinance or purchase the home.
These products are available through your local mortgage brokers and banks using FNMA, FHLMC, FHA, and VA guidelines.
EPACT 2005-2008 provides $2000 Builder Tax Credit
The Energy Policy Act of 2005 established a federal tax credit for builders that apply to each home that exceeds the energy performance threshold outlined in the 2004 International Energy Conservation Code (IECC2004). Eligible homes must be at least 50% more efficient than homes built to the IECC2004. It is fairly easy for builders to achieve this threshold by building tighter homes, installing high-performance insulation, and sealing duct work. The best way for a builder to find out how to meet EPACT is to consult with a certified RESNET (Residential Energy Services Network) Home Energy Rater. In order for a builder to receive a $2000 tax credit, the home must be rated by a RESNET certified rater using IRS approved software. For more information, visit www.natresnet.org/taxcredits/default.htm.
What makes a home energy efficient?
The cost of heating and cooling a home represents the largest cost of ownership, outside of the home mortgage expense. Everyone wants a home that is comfortable to live in, and yet the costs associated with reaching a comfortable level can be very high. Energy Efficiency can be defined as the use of products or systems that use less energy to do the same or better job as conventional products. In home construction and performance, there are many areas where energy efficiency can be achieved, to allow you to meet those desired comfort levels.
The EPA’s ENERGY STAR® program has developed a process for evaluating products used in a home, such as appliances, windows, lighting and other products that meet or exceed certain efficiency standards or recommendations. When choosing products for a home, ensure the products meet Energy Star ratings. This can include furnace, air conditioning and water heater performance, replacement of appliances in the home, and installation of energy efficient lighting such as Compact Florescent Lamps (CFL’s).
Other construction design aspects can have a significant impact on the energy performance of a home. Insulation levels should be adequate for the environment, and more importantly, proper installation of the insulation is critical in ensuring it is performing to the expected levels. Air infiltration and leakage can be another area where hidden openings in the building shell can cause heat and cooling losses to occur, reducing the efficiency of the home’s performance.
In addition to performance of individual components in a home, the EPA’s Energy Star Program also works with builders to qualify and certify home performance, to ensure that maximum performance is achieved. ENERGY STAR® qualified homes are designed to be at least 15 percent more energy efficient than homes built to the 2004 International Residential Code (IRC). ENERGY STAR® qualified homes offer homebuyers all the features they want in a new home, plus energy-efficient improvements that deliver better performance, greater comfort, and lower utility bills.
ENERGY STAR® homes have had their energy efficiency independently verified by an inspector known as a Home Energy rater. A HERS Rater will inspect and test the home during construction, and verify that the home meets EPA’s strict guidelines for energy efficiency.
RESNET; Establishes rules for the energy rating industry
In 1995 RESNET was founded to develop a national market for home energy ratings and energy efficient mortgages. One main goal of RESNET was the development of standards for quality of rating services. The standards set the national procedures for home energy ratings, and include testing and accreditation for raters and providers, development of verification processes for homes meeting ENERGY STAR® and energy efficient building standards, as well as meeting local Energy Code compliance.
A certified HERS Rater follows a prescribed standard for how a home is measured, verified and rated, and must comply with national standards to continue to perform certified ratings.
What is an energy audit or HERS Rating
A Home Energy Rating, performed by a Certified HERS Rater, consists of a full visual analysis of components and aspects of the home, along with energy performance testing of air infiltration with a tool called a blower door. Evaluation of home energy bills can also be included. A blower door slightly de-pressurizes the home and determines the amount of air leakage present. The home is compared to a hypothetical reference home which is based on the IECC 2004, and the home is then provided with a rating. The rating can be a numerical HERS rating or a ‘star’ rating based upon ENERGY STAR® requirements.
Along with the actual performance rating, the homeowner will be provided with details on areas of the home that need to be improved, in order to further save energy costs and improve the comfort and efficiency of the home.
By: Bruce Czech and George Scott
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