Energy Ratings and Mortgages

Home Energy Ratings

Home energy ratings provide a standard measurement of a home’s energy efficiency. Ratings are used for both and new and existing homes. In new homes rating often verify energy performance for the ENERGY STAR homes program, energy efficient mortgages, and energy code compliance. Homeowners who want to upgrade the home’s energy efficiency can use the energy rating to evaluate and pinpoint specific, cost-effective improvements. For existing homes, homeowners can receive a report listing cost-effective options for improving the home’s energy rating. An energy rating allows a homebuyer to easily compare the energy performance of the homes being considered.

There are two types of ratings:

• Projected ratings – Ratings performed prior to the construction of a home or prior to the installation of energy improvements to an existing home.
• Confirmed ratings – Ratings completed using data gathered from an on-site inspection, which could include performance testing of the home.

Confirmed ratings involve an on-site inspection of a home by a residential energy efficiency professional, a home energy rater. Home energy raters are trained and certified by a RESNET accredited home energy rater training provider.

The home energy rater reviews the home to identify its energy characteristics, such as insulation levels, window efficiency, wall-to-window ratios, the heating and cooling system efficiency, the solar orientation of the home, and the water heating system. Performance testing, such as a blower door test for air leakage and duct leakage, is usually part of the rating.

The data gathered by the home energy rater is entered into a RESNET accredited computer program and translated into rating score. The home receives a score between 1 and 100, depending on its relative efficiency. An estimate of the home’s energy costs is also provided in the report. The home’s energy rating is then equated to a Star rating ranging from one star for a very inefficient home to five stars for a highly efficient home.

Unlike an energy audit or a weatherization assessment, a home energy rating is a recognized tool in the mortgage industry. Home energy ratings can be used in a variety of ways in the housing industry. The star and the rating score provide an easily understandable means to compare more efficient homes by their relative energy efficiency, since a rating quantifies the energy performance of a home.

Energy Mortgages

An energy mortgage is a mortgage that credits a home’s energy efficiency in the home loan. For an energy efficient home, for example, it could mean giving the home buyer the ability to buy a higher quality home because of the lower monthly costs of heating and cooling the home. For homes in which the energy efficiency can be improved, this concept allows the money saved in monthly utility bills to finance energy improvements.

There are two types of energy mortgages:

• Energy Improvement Mortgage - Finances the energy upgrades of an existing home in the mortgage loan using monthly energy savings
• Energy Efficient Mortgage - Uses the energy savings from a new energy efficient home to increase the home buying power of consumers and capitalizes the energy savings in the appraisal