By Terri Baumgardner
Kansas City Star
http://www.kcstar.com/
May 30, 1999
Blue Springs builder Ken Riead is building a home for his family like no house he has ever built. Riead’s Blue Springs home will be a state-of-the-art environmental dwelling, part of the Environmental Protection Agency’s Energy Star Homes Program. And for Riead and his family, that will mean financial savings. First, energy-efficient houses such as Riead’s have lower utility bills, compared with regular houses. Second, Energy Star Homes qualify for better mortgage and financing packages. Third, energy- efficient homes have higher resale values.
Recent studies indicate that every dollar spent on a home’s energy-efficiency features increases the home’s value $20 to $30, Riead said. Riead, who owns Hathmore Homes, is working with the EPA to promote the Energy Star Homes Program. His house will serve as an energy- efficient showcase. Chet McLaughlin, the EPA’s pollution-prevention expert in Kansas City, said the Energy Star Program was part of U.S. efforts to reduce greenhouse emissions. Energy Star Homes feature energy-efficient appliances and equipment, such as air conditioners and furnaces. Such equipment has been sanctioned by a joint effort of the EPA and the U.S. Energy Department under an Energy Star labels program.
Energy Star houses also avoid air leaks that would drive up energy use - and costs - for heating and cooling. Special insulation and "high-performance" windows, such as double- paned ones, are keys in energy efficiency. Riead described the insulation he uses. "Icynene insulation makes it airtight, like a Styrofoam cooler," he said. "Europe and California have banned the use of fiberglass. It’s a carcinogen. Fiberglass is glass particles spun like cotton candy, and it can get in your skin and lungs." Riead’s use of Icynene is one reason his home also qualifies as a Health House, as sanctioned by the American Lung Association. The EPA estimates that an Energy Star Home uses 30 percent less energy for heating and cooling than a traditional house. To help assure the tight construction, an energy rater uses an air blower to check the house upon its completion to find any air leaks along doorways, baseboards or windows.
"Everything goes back to reducing our need to use energy," McLaughlin said. The EPA conservatively estimates that an Energy Star Home that lists for $163,000 will have monthly utility costs of $100. A traditional $160,000 home will run up at least $142 in monthly utility costs, the agency says. Riead calculates that he’ll save 60 percent on air conditioning costs in his 3,000-square-foot home. "Conventional thinking is 1 ton (air conditioning capacity) per 500 square feet," he said. "My house should have a 6-ton unit, but it will take only about 2 tons. So I’ll need about one-half of a conventional air conditioner."
Riead’s utility costs will be further reduced by the use of Energy Star-labeled appliances. He expects his refrigerator, for example, to use only a fifth of the power a typical refrigerator might use. Riead also is installing a charging station for an electric vehicle, a battery-operated backup power system and a solar heating system. Riead previously worked as Independence’s energy application administrator. He also teaches energy conservation classes at Blue River Community College. The Energy Star Homes Program is complemented by an Energy Star Mortgage Program. Because Energy Star homeowners will save on utilities, lenders that write Energy Star Mortgages can offer such things as a closing cost discount, $500 cash back or a 2 percent mortgage stretch.
"They let you stretch (the loan amount) you qualify for," explained Lisa Bloomfield Resch, communications director for the EPA’s Energy Star Homes Program. Riead wanted to get his mortgage from a local lender, Cameron Savings and Loan Association. Cameron has not been a participating Energy Star Mortgage lender, but for Riead it wrote the special mortgage, waiving some fees and providing discounts.
Two national lenders write Energy Star Mortgages. They are Chase Manhattan Mortgage Corp. and Countrywide Home Loans. The EPA does not dictate what features they must include in the mortgages. Chase’s incentives include free mortgage approval, free affordability estimates and an array of down-payment options. For instance, Energy Star Home borrowers may be required to have a down payment of only 3 percent, said Daniel Hester, a corporate account manager for Chase. Countrywide offers free application approval, free credit reports and a flexible qualifying ratio of up to a 2 percent stretch increase.
"Bottom-line terms for a customer buying a home - they would qualify for a higher loan amount," said Joe Morris, national account manager for Countrywide’s National Builder Division. Local and regional lenders across the country are starting to participate in the program, as well. Homebuyers can ask their lender about Energy Star Mortgages, and the lender can contact the EPA’s Energy Star finance coordinator, Carol May. "We encourage new banks all the time," Resch said.
"Consumers move the market by demanding Energy Star Mortgages and homes. Builders and financial institutions start responding. The EPA wants to prevent pollution and generally improve the lives of people living in new homes." The incentives might get even sweeter for Energy Star homebuyers or remodelers. The 2005 Energy Efficient Affordable Home Act provides up to $2,000 in tax credits for the builder of each new home.