Residential solar energy installations did not previously qualify for Property Assessed Clean Energy (PACE) financing. Today, however, those rules are changing.
Is PACE the right choice for financing your home solar power system? Is it even available yet in your area?
Advantages of PACE Financing for Residential Solar Energy Systems
PACE financing uses the value of your property as collateral for a loan used to purchase a residential solar energy system.
This means you don’t have to worry about whether your credit rating will qualify you for a low-interest loan or lease, or whether you have cash in the bank.
PACE loans can be paid back over a period of time, often up to 25 years. That’s longer than many other sources of funding for home solar projects. The longer term can mean you see savings from day one, as the loan payment is frequently less than the total amount you save on electricity by adopting solar.
Also, the interest on a PACE loan may be tax-deductible, saving you even more.
And if you think you might want to sell your home before you have paid off your PACE loan, it’s no problem. This financing is attached to your property, not to you personally. Consequently, it will transfer to the new owner as part of the property taxes.
Disadvantages of PACE Financing for a Residential Solar
Studies show that homes with photovoltaic energy systems often sell for more money, and sell more quickly than comparable non-solar homes.
But some buyers may be scared off by having to pay the higher tax assessments with PACE loans. Some real estate professionals have reported that homes with outstanding solar loans of this type linger longer on the market.
Mortgage lenders don’t really like PACE financing, and many won’t allow borrowers to buy homes with outstanding solar loans. Why?
Most of these loans put the PACE lender in a priority position in the event of a mortgage default. In other words, the PACE lender would be paid back first in case of a foreclosure, before the bank that holds the home mortgage.
In fact, these challenges have led the U.S. Office of Energy Efficiency and Renewable Energy to consider changes to the residential program.
Confused About Home Photovoltaic System Financing Options?
Currently, residential solar PACE loans are only offered in a few limited areas around the country.
For homeowners who are not eligible for these programs, several other attractive funding options are available. You could elect to take a home equity loan or a personal line of credit, for example, or you could opt for private financing through your home photovoltaic installation company.
If you’re like most of our customers, you may not be sure which method is best for your photovoltaic system. At Intermountain Wind & Solar, we can provide information on all of your financing options and help you understand the pros and cons of each. We serve customers in Utah, Nevada, Colorado, Idaho and Wyoming.
Contact us today to learn more about financing options for your residential solar energy system.