FAQ – Frequently Asked Questions
What is included in a Home Energy Audit?
What is an ROI (Return on Investment) analysis?
What is an Energy Improvement Mortgage (EIM)?
What is an Energy Efficient Mortgage (EEM)?
What the difference between an EEM and an EIM?
Who can offer financing through an EEM or an EIM?
Are there other financing options?
Who are the members of the EnergyARM network? What roles do they play?”
What is an Energy Improvement Project Manager? (EIPM)
What is included in a Home Energy Audit?
Our auditors inspect the full exterior and interior of the structure (including the attic and basement/crawlspace) as well as equipment, lighting and appliances. Our audits always incorporate an analysis of the health and safety aspects of the building including combustion appliance safety testing. The cost of a residential energy audit is based upon the size of the building, distance to travel and services requested.
What is the difference between RESNET HERS Rater training and certification and BPI Building Analyst training and certification?”
RESNET HERS Raters are trained and certified to analyze and quantify building energy performance. They calculate the energy usage of a residential building and determine the Home Energy Rating System Index Number for the building. This process is standardized across the nation and requires the use of certified software. Because of the level of standardization and normalization, HERS Ratings are used nation-wide to qualify homes for multiple programs and incentives. HERS Ratings can be performed on existing homes, but are mostly used in new construction to qualify homes for programs such as ENERGY STAR, LEED for Homes, NAHB Green Build, EEM/EIM, and the Federal Energy Tax Credit.
HERS Rater training includes training on all aspects of energy usage in a home, heat flow, air flow, moisture flow, heat load calculations, proper use of infiltration and duct leakage testing equipment and interpreting results, reading and working with building plans, creating scaled sketches, proper use of certified software, climate zones, construction techniques, thermal bypass and insulation installation inspections and reporting. Two ratings are performed during the training class. To complete certification, a two-hour, 50 question test is taken and a minimum 80% score must be achieved. Three additional probationary ratings must also be satisfactorily performed.
BPI Building Analysts are trained and certified to perform energy audits on existing homes. They analyze the energy usage of the home and its occupants as well as evaluate the home for any health and safety issues. Energy audits are not normalized but are specific to the particular home and occupants being examined. There is no specific software tool required, however, there are standards that must be followed. These standards are used to ensure that no harm is done to the residence or its occupants as a result of the audit or completion of the resulting work order.
BPI Building Analyst training includes training on all aspects of energy usage in a home, heat flow, air flow, moisture flow, potential health and safety issues, proper use of infiltration, duct leakage, carbon monoxide and combustible gas testing equipment and interpreting results, creating scaled sketches, understanding and interpreting BPI Standards and writing work orders. There are several utility programs and state programs that require BPI Building Analyst Certification in order to be listed as a qualified energy auditor. To complete certification, a two-hour, 100 question test is taken and a minimum 70% score must be achieved. (Candidates already certified as HERS Raters will take a 90 minute, 50 question test.) A field test must be taken to demonstrate equipment proficiency and appropriate use and interpretation of BPI Standards.
What is an ROI (Return on Investment) analysis?
ROI, or return on investment, is a measurement of performance used to compare the effectiveness, or economic return, of different investments. ROI is calculated by taking the benefit, or return, from an investment and dividing it by the cost of the investment. ROI is expressed as a percentage or a ratio that expresses how many times the net benefits (benefits from investment minus initial and ongoing costs) recover the original investment. ROI is popular because of its versatility and simplicity. ROI may be used in justifying a project or proposal, based on projected profits from the project and its estimated costs. ROI may be used to measure how effectively an objective was met. By comparing the ROI of different potential projects, a determination on which project to undertake may be made. Also, if an investment does not have a positive ROI or other investments have higher ROI, that is an indication that the investment should not be made. ROI has become one of the most popular metrics used to understand, evaluate and compare the value of different investment options.
What is an Energy Improvement Mortgage (EIM)?
An EIM is a mortgage that sets money aside for home improvements that will increase energy efficiency within the home. Energy improvement mortgages are available when a house is being purchased or refinanced. A certified home energy rater will examine the home and suggest improvements; once the improvements have been made and confirmed, the lender will repay the expenses (which have already been approved under the mortgage contract) to the borrower from an escrow account.
Borrowers will carry a higher mortgage payment with an energy improvement mortgage, but the additional cost may be balanced out or even erased by lower ongoing energy costs, as the home will be more efficient once the improvements have been made. Typical improvements that are considered include extra insulation, tightening of window and door seals and replacement of the HVAC system.
It is in the best interests of mortgage lenders to make homes more energy efficient, as this lowers owners’ monthly costs, improving their chances of being able to service the mortgage. Energy efficient homes also retain more of their value at resale and are attractive to a wide group of potential buyers.
As energy efficiency ratings for homes become more commonplace in the industry, more lenders will be attuned to offering energy improvement mortgages, appealing to both the bottom line and the social/environmental concerns of their customers.
What is an Energy Efficient Mortgage (EEM)?
An EEM is a mortgage that credits a home’s energy efficiency in the mortgage itself. EEMs give borrowers the opportunity to finance cost-effective, energy-saving measures as part of a single mortgage and stretch debt-to-income qualifying ratios on loans thereby allowing borrowers to qualify for a larger loan amount and a better, more energy-efficient home. To get an EEM a borrower typically has to have a home energy rater conduct a home energy rating before financing is approved. This rating verifies for the lender that the home is energy-efficient.
What the difference between an EEM and an EIM?
EEMs are typically used to purchase a new home that is already energy efficient such as an ENERGY STAR qualified home. The term EEM is commonly used to refer to all types of energy mortgages including Energy Improvement Mortgages (EIMs), which are used to purchase, refinance or provide a second mortgage for existing homes that will have energy efficiency improvements made to them. EIMs allow borrowers to include the cost of energy-efficiency improvements to an existing home in the mortgage without increasing the down payment. EIMs allow the borrower to use the money saved in utility bills to finance energy improvements.
Both EEMs and EIMs require a home energy rating to provide the lender with the estimated monthly energy savings and the value of the energy efficiency measures — known as the Energy Savings Value. EEMs (and EIMs) are sponsored by federally insured mortgage programs (FHA and VA) and the conventional secondary mortgage market (Fannie Mae and Freddie Mac).
Who can offer financing through an EEM or an EIM?
Lenders can offer conventional EEMs, FHA EEMs, or VA EEMs.
Conventional Energy Efficient Mortgages
Conventional EEMs can be offered by lenders who sell their loans to Fannie Mae and Freddie Mac. Conventional EEMs increase the purchasing power of buying an energy efficient home by allowing the lender to increase the borrower’s income by a dollar amount equal to the estimated energy savings. The Fannie Mae loan also adjusts the value of the home to reflect the value of the energy efficiency measures. For more information about Fannie Mae’s EEM you can call 1-800-7FANNIE (732-6643). Visit Fannie Mae’s web site to find a Fannie Mae-approved lender in your state.
FHA Energy Efficient Mortgages
FHA EEMs allow lenders to add 100 percent of the additional cost of cost-effective energy efficiency improvements to an already approved mortgage loan (as long as the additional costs do not exceed $4000 or 5 percent of the value of the home, up to a maximum of $8000, whichever is greater). No additional down payment is required, and the FHA loan limits won’t interfere with the process of obtaining the EEM. FHA EEMs are available for site-built as well as for manufactured homes. Applications for an FHA EEM may be submitted to the local HUD Field Office through an FHA-approved lending institution. HUD has a searchable list of approved EEM lenders. Information about the FHA EEM can be found on FHA’s web site. Additional information is available from HUD’s Office of Single Family Housing by calling (800) 569-4287. There is also a fact sheet about FHA’s EEM (70KB). The Manufactured Housing Research Alliance Web site has information about FHA EEMs for ENERGY STAR qualified manufactured homes.
VA Energy Efficient Mortgages
The Veteran’s Administration (VA) EEM is available to qualified military personnel, reservists and veterans for energy improvements when purchasing an existing home. The VA EEM caps energy improvements at $3,000–$6,000. Borrowers should ask their lender about a VA EEM at the beginning of the lending process. More information about VA EEMs can be obtained from the Web site for the U.S. Department of Veteran’s Affairs or by calling (800) 827-1000. Chapter 7 of VA Pamphlet 26-7 (Revised) (1.5MB) contains lender guidance on the VA EEM.
To learn more about EEMs contact Fannie Mae, Freddie Mac, the FHA or the VA. Additional information about writing energy-efficient mortgages can be found on the Web sites for the U.S. Department of Housing and Urban Development (HUD) and the Residential Energy Services Network (RESNET).
Are there other financing options?
Yes, many local, utility, regional, state and federal programs exist to help with up-front financing, plus there are several incentive programs and tax rebates that can be utilized as part of a complete funding package. Check out the Energy Retrofit Incentives and Funding Sources page to find what is available in your area. Some nationally available programs are listed below:
ENERGY STAR Mortgages
An ENERGY STAR mortgage pilot program is underway to demonstrate that financing can be a useful tool for enhancing the success of investing in energy-efficient homes by lowering borrowing costs, as well as demonstrating the importance of utilizing a network of qualified energy auditors and contractors to ensure that cost-effective energy efficiency improvements are realized.
By incorporating the costs of energy efficiency improvements into the loan itself, an ENERGY STAR mortgage allows borrowers to pay for those investments over the life of their loan and deduct the interest from their federal and state income taxes. One of the key benefits of an ENERGY STAR mortgage is that a borrower can finance and make energy-saving improvements to their homes without paying more for financing than they would for a typical mortgage. Participating lenders also offer borrowers an additional financial benefit above and beyond the value of the home energy savings, such as discounted mortgage rates, reduced loan fees, or assistance with closing costs.
Who are the members of the EnergyARM network? What roles do they play?
Homeowner’s Contractor Representative (HCR) – The HCR is the customer’s (homeowner, apartment owner, building owner) personal on-site advocate. They represent the customer at the jobsite, tracking the schedule, ensuring selected improvements are made, performing quality assurance functions and generally overseeing the contractors who are working on the project. The HCR is assigned by the EIPM.
Energy Improvement Project Manager (EIPM) – The role of EIPM is filled by the person or company who will take the customer (homeowner, apartment owner, building owner) through the entire process. This role may be filled by a General Contractor who manages the project and may sub out the various parts of the job, a Home Performance Contractor who may have all the trades and skill sets on staff for one-stop-shopping, a Remodeling Contractor who may do part of the work in-house while obtaining sub-contractors for other parts of the job, or a Building Analyst or HERS Rater who may perform the initial assessment, quality check the work being performed and execute the final test-out phase while assisting the customer in choosing contractors to perform the improvements.
Customer Support Representative (CSR) – The CSR is the customer’s main point of contact. The CSR works with the customer to help them understand the process, to review the suggested improvements, to select the work to be performed and to ensure all funding mechanisms have been addressed. The CSR is assigned by the EIPM.
Purchasing Manager (PM) – The PM is in charge of managing the escrow account. The PM will issue purchase orders after funds are placed in escrow and they will release the funds to pay the contractors after all required quality checks and sign-offs have been completed. The PM is assigned by the EIPM.
Building Analyst – BPI Building Analysts are trained and certified to perform energy audits on existing homes. They analyze the energy usage of the home and its occupants as well as evaluate the home for any health and safety issues. Energy audits are not normalized but are specific to the particular home and occupants being examined. There is no specific software tool required, however, there are standards that must be followed. These standards are used to ensure that no harm is done to the residence or its occupants as a result of the audit or completion of the resulting work order.
HERS Rater – HERS Raters are trained and certified to analyze and quantify building energy performance. They calculate the energy usage of a residential building and determine the Home Energy Rating System Index Number for the building. This process is standardized across the nation and requires the use of certified software. Because of the level of standardization and normalization, HERS Ratings are used nation-wide to qualify homes for multiple programs and incentives. HERS Ratings are performed both on existing homes and newly constructed homes to qualify for programs such as ENERGY STAR, LEED for Homes, NAHB Green Build, EEM/EIM, and the Federal Energy Tax Credit.
Trade Contractor – The Trade Contractor is a home improvement professional. They perform the work needed to improve the energy efficiency and, potentially, the health and safety, of the home. They provide bids to perform work in their area and are engaged by the EIPM for the project.
Energy Improvement Project Manager (EIPM)
The Energy Improvement Project Manager is the key person who makes the entire energy improvement process work efficiently and smoothly as possible. When a home owner signs up with EnergyARM to obtain an energy audit they actually are assigned an EIPM first. The EIPM helps the owner understand the difference between an energy audit and a HERS rating and also informs them about the monetary incentives available to them based on their geographic location.
Who exactly can be an EIPM? Any contractor who has experience being a project manager or general contractor is a good candidate to become an EIPM. All EIPMs must have general liability insurance but an EIPM does not have to be an energy auditor or home energy rater. However, a good understanding of what is involved in performing a quality home energy audit or HERS rating will be invaluable to the effective and successful EIPM. The residential retrofit industry is different than the new home industry and contractors who want to become involved in energy retrofits must become familiar with how the entire process works, including: Rebates, tax incentives and other monies, Energy Improvement and/or Energy Efficient Mortgages, basic residential building science, energy auditing software and specialized trades such as air and duct sealing.
Contractors who become EIPMs are not expected to know the entire retrofit industry immediately, but the old adages of “Knowledge is Power” and “Time is Money” definitely apply to the residential energy improvement industry. EnergyARM is a dynamic tool that will help automate an entirely new and productive energy improvement marketplace in the USA. All you need do to learn more about becoming an EIPM is to sign-up using the widget shown on the right side of this homepage. You will automatically be assigned a user ID and password and can start learning about how to use this online software tool effectively. Also, if you click on the ‘Videos” tab straight above you can watch several videos that help explain the role of the EIPM and how to get started.