What is HERS Report & Why Do I Need One?

Most energy-efficient financing programs will encourage you to have an energy rating for your new or existing home, which will tell you and the lender how energy efficient it is. A rating typically involves an inspection by a professional energy rater who is certified under a nationally or state accredited home energy rating system (HERS). There are several options regarding HERS, so the type of HERS used will depend on where you live. Some states even have more than one HERS.

For the most part, an energy rater will inspect the energy-related features of a home, such as insulation levels, window efficiency, heating and cooling systems, and air leakage. After the inspection, the energy rater will probably give you a report that includes the home’s energy rating, along with an estimation of annual energy use and costs. The report also may include recommended energy improvements, if needed, and their costs, as well as the potential annual savings and eventual payback of the improvements.

To help qualify for most energy-efficient financing, the report usually must show that the home is energy efficient or that recommended improvements are cost effective. Ultimately, any improvements will save you more money than you’d be borrowing to install them. While calculating whether a borrower qualifies for a mortgage, a lender can recognize these savings and add the cost of the improvements into the mortgage. Or, if the home is already energy efficient, the lender can stretch the debt-to-income qualifying ratio, which is expressed as a percentage (the ratio is calculated by dividing a borrower’s monthly payment obligation on long-term debts by the borrower’s net effective income or gross monthly income).

The cost of a home-energy rating and how it can be paid—by the borrower, the seller, the lender, the real estate agent—or financed as part of the mortgage, as well as the availability of certified energy raters, can vary from state to state and from one energy-efficient financing program to another.

For more information on who to contact for a HERS report in Atlanta contact us today.

Jonathan Blackwell

404-551-3845