|HERS, or Home Energy Rating Systems
A HERS report is similar to a miles-per-gallon rating on a car. HERS are program s which provide evaluations of individual homesÕ energy-efficiency. A HERS report is prepared by a trained Energy Rater. Factors such as insulation, appliance efficiencies, window types, local climate, and utility rates are used to rate the home and calculate energy costs.
A HERS Report includes:
Overall Rating Score of the house as it is.
Recommended cost-effective energy upgrades.
Estimates of the cost, annual savings, and useful life of upgrades.
Improved Rating Score after the installation of recommended upgrades.
Estimated annual total energy cost for the existing home before and after upgrades.
Rating scores are between 1 and 100. Higher scores indicate greater efficiency. Cost-effective upgrades are those which will save more money through energy savings than they cost to install.
U.S. Department of Energy recommended Home Energy Ratings contain a numerical score from 1 to 100, a one to five star-plus rating, and the estimated energy costs. Higher scores indicate greater efficiency. Cost-effective upgrades are those which will save more money through energy savings than they cost to install.
A HERS rating usually costs between $100 and $300. This could be paid for by the buyer, seller, lender, or real estate agent. Sometimes the cost of the rating may be financed as part of the mortgage. No matter how the rating is paid for, it is a very good investment because an EEM could save you or your buyer hundreds of dollars each year.
||THIS IS WHY THE EEM WORKS
Energy-efficient homes cost less to own than non-efficient homes, though they may start off with higher price tags.
|Same Home |
(90% mortgage, 8% interest)
|The true monthly
cost of home ownership
* Estimated mortgage payments are based upon principle and interest only, and do not include taxes and insurance. Value indicated here are for example only, and will vary from home to home.
Many homes qualify for energy upgrades.
This home qualified for $4,816 in upgrades. With the EEM, lenders recognize the savings the upgrades will bring. Borrowers may use these potential savings like extra cash, and add the cost of upgrades into the mortgage, paying them off easily as part of the monthly mortgage payment. Once the upgrades are installed the potential savings turn into real savings.
The other EEM option is for the lender to stretch debt-to-income qualifying ratios to allow a larger loan for a house that is already energy efficient. A debt-to-income ratio "stretch" means that a larger percentage of the borrower's monthly income can be applied to the monthly mortgage payment. That means the buyer has more borrowing power based up on the same income.