Because the science of energy efficiency analysis was originally shaped toward industrial applications, there is an intrinsic cost-benefit component.  However, the hard-edged economic analysis used in industry may not be appropriate for home economic decisions.  The decision to set your thermostat at 78° instead of 73° probably has more to do with your comfort than it does with your financial bottom-line.  That said, there is certainly value in understanding the economic benefits of an energy efficient home.

Several Government Sponsored Enterprises such as the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac) offer programs for energy efficient mortgages and energy improvement mortgages.  FHA and Veteran Affairs also have EEM programs. 

Energy efficient mortgages allow a homebuyer to qualify for a greater loan, often with no additional down payment.  In theory the total cost of ownership should be less with an energy-efficient home because the owners spend less on energy.  This reduced operating cost allows more money to be spent on the house payment.  The costs of the energy upgrades are included in the home mortgage.

Energy improvement mortgages finance the costs of turning an existing home into a more energy-efficient house.  The costs to improve efficiency must be documented as cost-effective to qualify.

In both the case of EEMs and EIMs, a home energy rating is necessary to estimate and verify the energy savings.  In recent years it seems that both EEMs and EIMs have declined in relative importance.  However, with home financing becoming increasingly more difficult in recent years,  mortgages tied to home energy efficiency will once again become more important. 

Currently the U.S. Federal government offers a $2,000 tax credit to builders of energy-efficient homes.  The credit is available to homes that use 50% less (HERS rating of 50 or less) heating and cooling energy than a home just meeting IECC 2004. 

Home Resale Value

All home improvements have been promoted as increasing a home's resale value.  In most cases, however, the cost of the improvement does not equal the difference between the selling and asking prices.  Home energy efficiency seems to be an exception.  Ninety-two percent of all home buyers consider energy efficiency at least somewhat important with 46 percent of all home buyers ranking energy efficiency as very important when considering a home for purchase.

Documented energy ratings are a growing trend in real estate transactions.  Buyers are eager to know the energy costs of a home before they buy.  And sellers see energy efficiency as a top selling point in an increasingly difficult market.

Take the first step to realizing the economic benefits of energy efficiency.