THE VIRGINIAN-PILOT
Copyright (c) 1994, Landmark Communications, Inc.
DATE: Saturday, July 23, 1994 TAG: 9407220437
SECTION: REAL ESTATE WEEKLY PAGE: 04 EDITION: FINAL
SOURCE: Stories by Kathleen Butler, Special to Real Weekly
LENGTH: Long : 145 lines
If you're thinking of buying a bigger home, but you're afraid the utility bills will be too high, help is at hand.
The Department of Housing and Urban Development has made Virginia a test state for its Energy Efficient Mortgage program. The pilot program, run by HUD's Federal Housing Administration, allows borrowers to add the cost of energy-efficient improvements to their home mortgage.
A similar program is available for mortgages with the Department of Veterans Affairs. The state also will introduce energy-efficient mortgages next month through Fannie Mae and Freddie Mac, two corporations that specialize in buying mortgages.
Not every energy program is limited to home buyers or refinancers. Current homeowners can borrow up to $10,000 from Virginia Power for energy-saving home improvements. (See adjacent story).
``Anybody who has a house can get an energy-efficient loan,'' says Christine Taylor, executive director of the Virginia Residential Energy Foundation and Virginia Home Energy Rating Organization in Richmond. The independent, non-profit corporations were established by the state's 1991 energy plan.
``It's great to be one of the few states in the country that can offer this to its citizens,'' Taylor says.
The reason for pushing such loans is clear: Energy-efficient homes cut the cost of utility bills, making homeownership more affordable.
``If we can go in and reduce the amount a person is paying for energy, we can reduce what it costs to operate a house,'' says Javoun ``Jay'' Smallwood, executive director of the MECCA Foundation, a non-profit affordable-housing group in Suffolk.
Last year, Virginia became one of five states to test the FHA Energy Efficient Mortgage. Under the plan, people buying or refinancing a home with an FHA loan can finance up to $8,000 of energy improvements in their mortgage.
The exact amount is $4,000 or 5 percent of the home's value, whichever is greater, up to $8,000. The FHA maximum loan amount is $123,750, excluding the improvements.
Lenders will not consider the additional amount of the loan when qualifying borrowers for the mortgage. If a borrower wants to add $4,000 worth of improvements to an $80,000 mortgage, he or she need only qualify for an $80,000 loan, not the $84,000 total.
If state-approved inspectors find that a home is already energy-efficient, the FHA allows borrowers more lenient qualifying standards, Smallwood says. .
On a mortgage financed at 8 percent, for example, someone with a monthly income of $2,500 can finance an additional $6,814 if the house is deemed energy-efficient.
To get an FHA Energy Efficient Mortgage, Virginia residents must have the house rated by an independent contractor certified by the Home Energy Rating Organization. There are 51 certified raters throughout the state, nine in Hampton Roads.
During the two- to three-hour inspection, contractors will look for ways a house can improve its energy-efficiency. The inspection typically costs about $200 to $250, Taylor says, up to $200 of which can be added to the home mortgage.
Raters must have at least five years of experience in energy-efficiency and energy science, Taylor says. They must take a weeklong course, pass a written exam and be evaluated on two home inspections before they can be certified.
``We have some pretty severe up-front requirements,'' she says.
During an inspection, rater Ken Zenzel, a partner of Energy Pro in Virginia Beach, looks for air-infiltration and duct leaks, he says. He also checks the type of insulation, the type of energy-related equipment - such as heating and cooling systems - and the building's exposure to the sun and wind.
After the inspection, raters complete a seven-page form and send it to the Home Energy Rating Organization. There, the information is plugged into a computer program that ``rates'' the house on energy-efficiency. It also makes recommendations for improvements and estimates how much money those improvement will save.
Typical improvements include adding insulation or weatherstripping, englazing windows and buying improved heating and cooling equipment.
After the loan is approved, borrowers have 90 days to complete the improvements. During that time, Taylor says, the energy funds are kept in an escrow account.
Once the improvements are finished, the rater retests the home. If the improvements have been done properly, the contractors or the borrower is paid from the escrow-account money.
Smallwood of MECCA and a colleague, Sharon Dockery, became certified energy raters last month. Since then, Smallwood says, he has been trying to educate local real estate agents and lenders about the program. MECCA also is working with Ronald E. Wilkins, owner of Energy Tec in Portsmouth, who plans to make energy-saving improvements to qualifying homes.
Though some people are skeptical of the program, Smallwood says, energy efficiency is the wave of the future.
``We know this is the way to go,'' he says.
For details on the various energy-efficiency loan programs available in the state, call the Virginia Residential Energy Foundation at (804) 358-0892. MEMO: Related story on page 4.
TOOLS OF THE TRADE
Ken Zenzel, a partner of Energy Pro in Virginia Beach, has been
inspecting homes for energy efficiency since 1989, he says. Last year,
he became a state-certified rater for several energy-efficient mortgage
programs.
During an inspection, Zenzel and his partner, Tom Perkins, look for
ways a home can cut its utility costs. They work with the help of a
blower door, a duct blaster and a smoke puffer - three key tools for an
energy rater:
The blower door is a fan inserted in the frame of an outside door.
Blowing air out of the house will create a measurable difference between
the inside and outside air pressures, making it easier to identify
leaks.
``You can literally feel it with your hand,'' Zenzel says.
The duct blaster works with the blower door to measure duct work
leaks. Such leaks, Zenzel says, can make up about 20 to 30 percent of a
home's heating and energy costs.
The smoke puffer allows raters and homeowners to see air escaping
from a house. A small puff of smoke along a window ledge, for instance,
will immediately escape through any leak. ILLUSTRATION: Color photo on cover
Steven Lowrie...Christina Taylor...Jay Smallwood
Photo by Paul Aiken
Tom Perkins, left, and Ken Zenzel of Energy Pro prepare to test a
Virginia Beach house for air leaks. Such inspections are often
required for homeowners applying for energy-efficient loan
programs.
Photo by Christopher Reddick
Steven Lowrie, left, national development director with the Virginia
Residential Energy Foundation, Christine Taylor, the Richmond
group's executive director, and Jay Smallwood, executive director of
the MECCA Foundation in Suffolk. Beside them is a blower-door tester
that checks for air leaks.
Photo by Christopher Reddick
Ronald E. Wilkins, owner of Energy Tec in Portsmouth, is working
with the MECCA Foundation in Suffolk to make energy-saving
improvements to homes.
Photo by Paul Aiken
Ken Zenzel, left, and Tom Perkins of Energy Pro in Virginia Beach
use a blower-door fan to check a home for an air leak. ``You can
literally feel it with your hand,'' Zenzel says.
by CNB