Owning a HERS Rated Energy Efficient Home Saves You Money on Earth Day and Every Day
RESNET HERS Index
Contact: Valerie Briggs, Communications Director
760-681-2390
valerie@resnet.us
Owning a HERS Rated Energy Efficient Home Saves You Money on Earth Day and Every Day
Owning a HERS Rated energy-efficient home is a win-win for your wallet and the planet, not just on Earth Day, but every day. Doing so can save you money on your bills now, and it could also improve your home’s resale value.
A recent study conducted by Freddie Mac confirms it. The study found that homes that were HERS rated sold on an average 2.7% more than comparable unrated homes. In addition, homes that received lower HERS Index Scores sold for 3 – 5% more than homes with higher HERS Index Scores.
The study found that buyers of HERS rated homes also have more desirable mortgage profiles: owners with higher average credit scores (FICO), lower Loan To Values (LTV) ratios at origination, higher origination unpaid principal balances (UPB), higher owner incomes, and higher neighborhood incomes at the census tract level.
The analysis of this data also concluded:
• RESNET-rated homes have lower delinquency rates than unrated homes, both in terms of becoming ever 60 days and over 90 days delinquent.
• Homes with lower HERS Index Scores had even lower delinquency rates.
• The lower delinquency rates remain for HERS rated versus unrated homes even for homeowners with higher debt-to-income ratios of 45% or more.
Developed by the Residential Energy Services Network, or RESNET, a HERS Index Score is available only via certified RESNET Energy Raters. Over 2.7 million homes across the country have a HERS Index Score, which tells homeowners and prospective buyers how their homes compare to other similar ones in terms of energy usage. Think of it as the home industry’s version of the MPG (miles per gallon) rating that you find in the auto industry. The lower a home score, the higher its efficiency. “Knowing your score can help you evaluate where to make changes to your home, from sealing leaks in your heating and cooling distribution system to updating your roof in order to be more energy-efficient. And a high-performance energy-efficient constructed home is the foundation for building a healthy home,” says Steve Baden, executive director of RESNET.
Based on several variables that affect the energy efficiency of a home, including exterior walls, attic, windows and doors, heating and cooling systems, ductwork, water heating systems, lighting and appliances, the HERS Index Score tells homeowners and prospective buyers how their homes compare to other similar ones in terms of energy usage.
Outside of a mortgage loan, heating, cooling, and water heating constitute the largest cost of homeownership. The HERS Index Score can help homeowners outline those energy features of the home and the expected cost of utility bills.
A typical existing home (built before 2000) scores well over 100 on the HERS Index while a standard new home, in most states, will receive a score between 75 and 90. Each 1-point decrease in the HERS Index corresponds to a 1% reduction in energy consumption compared to a model energy-efficient home. For existing homes, a home energy audit can provide the homeowner with a HERS Index Score and a detailed report regarding energy problems in the house.
The study “Energy Efficiency: Value Added to Properties & Loan Performance” looked at homes rated under RESNET’s Home Energy Rating System (HERS) between 2013 and 2017. The report states “[Freddie Mac] conducted this analysis to understand the value and the loan performance associated with energy-efficient homes to support the consideration of energy efficiency in mortgage underwriting practices.” Freddie Mac used data provided by RESNET on HERS rated homes from 2013 to 2017 to select a random sampling of about 70,000 HERS rated homes. Working with a major credit bureau, Freddie Mac obtained data on each of these homes plus five comparable unrated homes for each rated home for a total of about 450,000 properties.
For more information, visit www.hersindex.com
Valerie Briggs
RESNET
+1 760-681-2390
email us here
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