Understanding 3 Common Options for Solar Financing
When you are ready to get a solar energy system and start saving money on your monthly bills, one of the first decisions you need to make is how you plan to pay for it. If you have cash and can pay for it up front, that makes the decision pretty easy, but most people don’t have the money to pay for an entire residential solar energy system at the time of installation. How you choose to finance it could differ based on your own financial situation and your needs, but you should have a good understanding of what is available.
This type of financing comes from a bank or financial institution, and many homeowners choose a home equity line of credit (HELOC). If you are buying a home and qualify for an FHA loan, there may be an option for an energy efficient mortgage (EEM) loan that includes the cost of a solar system in the purchase price. Talk to your lender to learn more.
These loans don’t require collateral; instead it’s a loan through the solar company, who provides the panels and installation up front, and you pay the money back over the course of several years in an installment loan. Most people can qualify for these loans, but it’s a good idea to check the fine print on what is in the payments, including fees and other requirements.
A solar lease is another popular choice for homeowners who don’t have cash up front and can’t get a loan. This is a “no money down” option to get solar immediately, and you make monthly payments on the system while enjoying lower energy bills. The solar company will qualify you for the lease.
Solar Financing When You Move
If you are planning to move, look carefully at the fine print in a solar loan or lease. Most of the time homeowners will not take solar panels with them after selling a home because it’s expensive to move them, it could void the warranty, and it leaves holes in the roof as well as different color shingles where the panels were shading it from the sun and weather. You will likely leave the solar system for the next homeowner, but if you still owe money on the solar loan you may have to buy out the remainder of the contract at the time you move. Since your home will probably be worth more with a solar system, you can set a higher asking price to make up for the remainder of the loan you owe.
With a solar lease, any buyers will need to agree to apply for their own lease and take on the monthly payments. If your buyers can’t qualify for a lease or don’t want that extra payment that could be a deal breaker in a sale. Most leases are between 15 and 25 years, so if you’re not going to be in your home for that long, a lease might not be a good idea.
Tax credits are still available as long as you get a solar system before 2022, but the amount you can claim goes down each year. If you opt for a solar lease, you don’t own the panels and therefore cannot claim the tax credit.
Call PRVL Energy today to talk more about your options and get solar for your home.