Wednesday, September 28, 2022

Can Solar Panels Prevent Me From Getting A Mortgage

Best Green Loan: Clean Energy Credit Union

How to get a mortgage on a house with leased solar panels. TOP 5 must do’s!

Clean Energy Credit Union

Why We Chose It: Clean Energy Credit Union is focused specifically on helping people finance clean energy improvements to their homes, including adding solar panels. Its easy to become a member, and the company is a Green America certified business. You can get up to $90,000 in financing at rates as low as 4.99% to 5.49%.

  • Regulated by the National Credit Union Administration

  • Low APRs starting at 4.99% to 5.49%

  • Low processing fees and UCC-1 filing fees

  • No recent CFPB complaints

  • Short time in business

  • Youll have to make two payments if you already have a mortgage on the property.

  • Funding could take 45 to 60 days or more.

Clean Energy Credit Union was founded in 2017 and is headquartered in Centennial, Colorado. The company is regulated by the NCUA and certified by Green America, a designation showing Credit Energy Credit Unions commitment to improve the economy and protect the environment. Its easy for anyone in the United States to become a member, and the company offers a variety of green loans, including for solar electric systems, making it our choice for best for a green loan.

A search of the CFPBs consumer complaint database didnt reveal any complaints against the company from November 2018 to November 2021. This is excellent compared to the other companies on our list.

The terms and conditions you can expect with a Clean Energy Credit Union solar panel loan are as follows:

Benefits Of Selling With Solar

Increasing the value of your home and helping it sell up to 20% faster, are two of the top benefits a solar energy system offers to home sellers, according to Solar.com.

A study published through the Office of Energy Efficiency and Renewable Energy suggests that, in 2015, buyers were willing to pay $15,000 more for homes with solar panel systems than for comparable homes without.

There is no reason to believe those numbers will go down anytime soon, as companies and households nationwide show increased interest in sustainability.

Faster sales and higher offers from prospective buyerswhats not to love?

Well, these benefits only apply to solar panel owners. If you lease your system or have financed panels, you may run into a few snags with mortgage lenders and potential buyers.

First Things First: Ask Your Bank About Loan Options

Banks are becoming aware of a big advantage that makes solar a good bet. Unlike borrowing for a typical home improvement, borrowing to go solar has an immediate financial return.

Most banks now allow you to finance solar like they would finance any other home improvement loan like a new deck or bathroom, with a second mortgage. With interest rates at all-time lows of under 2%, the economics of a solar purchase are on your side.

A new deck or bathroom doesnt actively reduce your overhead costs the way a solar array does.

Depending on how you structure your solar loan, the immediate savings on your electricity bill mean you come out ahead right away.

That is because the additional payments on your mortgage to repay the loan, when combined with a much smaller post-solar electric bill, can easily amount to less than the old utility bill that youve paid monthly for years to merely rent your electricity from your electric utility.

So borrowing to save money immediately with solar is a means to owning a cash cow. A solar loan is not like another debt that simply adds to your indebtedness.

There are many options for structuring this kind of financing, and you just need to decide how you want to set up the loan. By starting with the amount you want to pay each month between your new lower bill for electricity from the utility, plus the solar loan amount, you can determine the length of the loan.

Recommended Reading: Does Going Solar Really Save Money

The Pros And Cons Of A Conventional Energy Efficient Mortgage

The main advantage of Freddie and Fannies programs is the substantial reduction in paperwork and administrative hoops to jump through compared to an FHA or VA loan.

The programs can combine with other conventional mortgage types to allow your buyers to bundle nearly any kind of improvements they wish into their mortgages, not just solar financing.

Most buyers qualify for extremely affordable down payments, and unlike FHA loans, there is no mandatory mortgage insurance for the life of the loan.

While conventional mortgages require monthly insurance premiums, those can be waived with a 20% down payment or canceled when the buyer reaches 20% equity in the home.

On the downside, buyers must qualify for the entire loan amount, including the cost of solar upgrades.

Not every buyer will have the excellent credit score and debt-to-income ratio required for a conventional loan.

Plus, buyers must qualify for the entire loan amount, not just the home price.

Solar Panel Loan Rates: How Do I Find The Best Rate

Solar Panels Work in Winter: Don

Confident you know the best type of loan for your situation? Now comes securing the lowest interest rate possible. Most solar loan interest rates, such as those from lender LightStream, range from 3.99% to 16.99%. But it is possible to get lower rates.

Here are a few tips to keep your rates as low as possible when financing a solar panel system:

  • Shop around: It’s usually best not to go with the very first lender you find. Spend some time shopping around and comparing rates. Most lenders will give you a free quote that’s good for a number of days while you compare offers from other companies. Have a plan before you start getting quotes.
  • Have someone co-sign: Having a co-signer on your loan especially one with excellent credit makes a lender far more likely to lower your interest rate.
  • Improve your credit score: The higher your credit score, the lower your interest rate will be. Small changes to your credit score before getting a quote can save you thousands in the long run. Here are a few tips to do so:
  • Pay back any old debts and credit card balances
  • Confirm your revolving credit limit is at its maximum
  • Be sure not to miss any monthly bill payments
  • Don’t open any new credit cards near or during the process of applying for a solar loan

You May Like: How To Get A Sole Proprietorship In Texas

And Strategies You Can Use To Drop Your Mortgage Insurance Premiums

In early 2016 I purchased a house with only 10% down, yes you read that right. I broke one of the conventional rules that fiscally sound home buyers live by. Theres a good reason for this rule because, without 20% percent down you, the homeowner is required to pay PMI or private mortgage insurance. See Why I decided to purchase the house without enough money to put 20% percent down.

As a consequence of only paying 10% down, I was stuck with an extra $123.44 a month in mortgage insurance premiums. My goal was to get rid of that PMI as soon as possible, the alternative, wait 7 years and 8 months for my Loan to Value to reach 78% based on the original amortization schedule. Paying a grand total of $11,356.48 in PMI premiums over that time. Ouch!! Understandably my goal was to get rid of it as soon as possible.

You may be wondering how Solar Panels fit into this, well in addition to the obvious benefits, you can use them as a tool to increase the equity in your home and drop Mortgage Insurance faster, Ill get into that more in a bit.

If you find yourself in the situation I was with my PMI, the way out is to pay down enough on your loan to where you have an 80% Loan to Value. Then you need to notify the mortgage company and request that your Mortgage Insurance Premium be dropped.

Learning from past experience, my strategy to drop Mortgage Insurance Premiums was three-fold.

In short, I needed as much wiggle room as possible. I didnt want to pay for another fruitless appraisal.

Solar Panel Loans: Compare Solar Financing Options

Solar loans fund solar panels and installation. You can use an unsecured personal loan, home equity financing or cash-out refinancing.

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Solar panels can be a cost-effective way to shift your household to a sustainable energy source.

The average solar panel system, including installation, can cost between $15,000 and $25,000, according to the Center for Sustainable Energy, but systems can last 25 to 30 years and save you thousands of dollars in electric bills over their lifetimes.

One financing option is unsecured personal loans, which have fixed interest rates and terms of two to seven years. The short repayment terms on unsecured solar loans make them one of the quickest ways to pay off the purchase so you can start saving.

You can also consider a home equity loan or line of credit or cash-out refinancing to pay for solar panels. Federal and state tax benefits are also available to help you get some of the money you spend back. If youre not ready to commit to solar panels of your own, leasing is also an option.

Here are five lenders that offer unsecured solar loans, as well as details about other financing options.

Recommended Reading: How Does A Sole Proprietorship Work

Local Solar Loan Programs

Homeowners who are interested in going solar should also know about Property Assessed Clean Energy loan programs. According to the Department of Energy, PACE programs “allow a property owner to finance the up-front cost of solar energy or other eligible improvements on a property and then pay the costs back over time through a voluntary assessment.” What makes these programs unique is that the assessment is tied to the property itself, not to the individual.

PACE financing legislation exists in some form in 36 states plus Washington D.C. A handful of states have separate solar loan programs and rebates for homeowners. Here are some current programs worth knowing about:

State

3% APR reduction on bank loans

7 years

Additionally, certain cities, municipalities and even utility companies may offer low-interest solar loans. We recommend researching your specific area before turning to banks or credit institutions. The DSIRE database is a helpful resource.

How Heavy Are Those Panels Anyway Will My Roof Be Able To Handle Them

Can California Homeowners Association Keep Me From Going Solar? – #58

Solar panels actually arent that heavy.

Most are just 2 to 3 pounds a square foot, which isnt a problem for most roofs.

But if your roof is in need of replacement or major fixes in the first place say youve had a termite infestation or have some leaks youre not an ideal candidate for solar until you get a new one.

Also Check: Why Should I Go Solar

What If I End Up Needing A New Roof Or Need Some Work Done

Youre probably going to have to remove your solar panels if significant fixes are needed and its probably going to cost you.

Many lease clauses specifically call out that any removal of the system is done at the homeowners cost, not the solar companys, said Benjamin Airth, a senior manager for the San Diego-based Center for Sustainable Energy.

And, of course, if you own the system, youll also need to pay someone to remove them.

So, again, you should get your roofing projects done before you go solar.

What Is A Brightadvantage Solar Loan

Our solar loan, called, Sunrun BrightAdvantage, allows you to finance the purchase of your solar system through our bank partners. This means fast approvals, low fixed interest rates, no upfront payment and no penalties associated with traditional solar loans, all while taking advantage of solar tax credits and rebates.

Read Also: How Much Does Rooftop Solar Cost

Best For Good Credit: Lightstream

LightStream

Why We Chose It: LightStream offers unsecured solar panel loans of up to $100,000 with APRs as low as 3.99%. Although theres no stated minimum credit score requirement, you need to have good-to-excellent credit to qualify.

  • High maximum unsecured loan amount of $100,000

  • No fees or prepayment penalties

  • Long maximum repayment terms of 12 years

  • Quick funding, as soon as the same day

  • Lower amount than you could get with a loan secured by your home

  • You may have to make two payments, as its separate from your mortgage.

LightStream is a Truist Bank division offering an unsecured solar panel loan thats best for people with good credit. This is because if you have good-to-excellent credit , you can potentially get up to $100,000 in financing with APRs as low as 3.99% .

Truist Bank, which owns LightStream, was founded in 1872 and is headquartered in Charlotte, North Carolina. A search of the CFPBs consumer complaint database revealed 39 complaints about installment loans from November 2018 to November 2021. Some of the complaints didnt have details associated with them, but many of the issues are related to getting the loan. The companys responses to the complaints are timely.

As with all loan applications, make sure to provide all requested information as quickly and accurately as possible.

The terms and conditions you can expect with a LightStream solar panel loan are as follows:

Do Solar Panels Increase Home Value

Help Me Sun !!!!: Installing Solar Panels For Homes

Solar energy has unique financial benefits, as they should save money with regard to energy-efficiency.

Buying a home with solar panels allows homeowners to benefit from solar energy without the headache associated with getting them installed.

The solar panel industry boasts an added home value increase of $15,000–$20,000 on average, largely due to nearly immediate power bill savings.

It’s important to note, however, Fannie Mae states that leased solar panels cannot be included in a home’s valuation. The Federal Housing Administration doesn’t offer much guidance for evaluating leased solar panels at all.

Fortunately for sellers, even if they sold their home soon after they had solar panels installed, most studies indicate that they recoup most or all of their investment.

Recommended Reading: How Safe Is Solar Energy

Buying A House With Solar Panels Financed Through A Solar Loan

Unlike a lease, if a homeowner installs solar equipment with a solar loan, the loan will always be their liability, even if the property is sold. So, if youre looking to buy a home with solar panels financed through a solar loan, you dont need to worry about making additional monthly payments. Instead, the asking price for the home might be higher to factor in the cost of the solar equipment.

How Solar Affects Buying Selling And Refinancing A House

Solar is becoming more popular than ever due to the fact that homeowners can save money as well as make their house green. But when buying or selling a home solar panels can possibly add some complexity to a transaction. As a buyer or seller, you should be aware of both the benefits as well as the problems that solar panels have when you enter the market to buy or sell a house. Obviously, the more information you acquire, the easier it will be to make the best decision that will benefit over the short and long-term future.

Do solar panels increase your property value? This is a common question that most people have when they first start researching. This question depends on a few factors including:

  • The type of home you own
  • Whether your solar panels are leased or owned
  • What part of the country you live in
  • How much energy you will be saving
  • What the starting value of the home already happens to be

PROBLEMS WITH LEASING SOLAR PANELS

While leasing a solar panel system may seem like a great idea, it can create an awkward situation when you decide to sell your home. Breaking your lease with a solar panel company will usually result in you being charged the full bill for the 15 years of usage the homeowner agreed to. The only options you are left with are pay the rest of the bill off or transfer the lease to the buyer of your home.

REFINANCING

VA Loan Specialists

Semper Fi, Dan Chapman CAPT, USMC

Call 456-7139

Read Also: How Many Solar Panels Do I Need For 1000 Watts

Whats The Likelihood Something Will Break

Pecan Street, a University of Texas-based energy research center, monitored solar systems on 255 homes with rooftop solar over four years and reported just two major failures during that time. In both cases, the inverter which converts solar power into electricity you can use was the culprit.

Indeed, the inverters the solar component most likely to need replacing.

Stellar Solar co-founder Michael Powers said inverters generally last 15 to 20 years and many companies warranties cover fixes for at least half of that timeframe. His company offers 25-year warranties for microinverters and 10-year warranties for more basic ones known as string inverters, though customers can buy longer warranties.

If your warrantys up when your inverter fails, youll likely pay a few thousand dollars for a new one, though Powers said costs have come down significantly in the last decade.

Another 54 homes in the Pecan Street survey had more minor issues that researchers said usually cost less than $25 in parts and less than an hour of labor.

Those fixes wont necessarily be on your dime, though.

If youre leasing the panels, your agreement might cover maintenance or product problems.

And warranties in California usually cover panel issues for at least 10 years and often promise those panels will produce at least 80 percent capacity after 25 years. Solar installers also often offer warranties that cover installation issues that may have negatively affected the panels.

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