The possibility of saving on energy bills and doing more to invest in renewable energy are the major reasons why households make the switch to solar. For many families across the US, the upfront investment required to install solar panels will be paid back by the money saved from lower monthly energy bills. No matter how quick the payback, the investment required to get started with solar is still large, so let’s illuminate some of the financing options available:
If you can save the amount needed and pay for your solar installation with cash, that’s the best way to see the fastest payback and not have to worry about accruing interest like you would with a loan. However, perhaps you’re looking to switch to solar as soon as possible and don’t want to wait a number of months or years to save the money yourself. If cash isn’t the right route for you, there are plenty of other options.
HELOC or Mortgage Refinance
If you’re looking to make improvements to the home you own, a Home Equity Line of Credit (HELOC) or refinancing your mortgage are great options. A HELOC allows you access to a line of credit, similar to that of a credit card, but with lower interest rates so you can borrow against that line of credit to finance your solar installation. If HELOC isn’t an option, you can always refinance your mortgage to take into consideration that added home value created by making the switch to solar. With this method, the cost of the installation will be absorbed in your monthly mortgage payment. Today, solar-specific mortgages are becoming more common amongst mortgage lenders.
These types of loans are only available in places like California, that have addressed how to incorporate these loans into their property tax ecosystem. If you are in a state with PACE or HERO loans available, these affordable options will account for the cost of your solar panels in your property tax payments. However, loans in this category will place a tax lien on your home, making the selling process complicated if you choose to leave before your solar panels are paid off.
Unsecured Solar Loans
The process to obtain an unsecured solar loan from a lending office is very straightforward and simple; usually based on your credit score, you won’t have to put up any large assets as collateral for unsecured loans. Due to the nature of the loans, the interest rates will likely be much higher than the other options, costing you more in the long run.
A Power Purchase Agreement (PPA), or a lease agreement, is similar to leasing a car. You’ll pay monthly fees to lease the solar panels, but you’ll never own them outright. Another downfall to this option is that it renders you ineligible for the attractive tax credits that often incentivize the switch to solar in the first place.
Del Sol Can Help!
If you’re not sure where to start when it comes to installing solar in your home, reach out to our team at Del Sol Energy today. We can help you determine the best path forward for your specific situation. We are passionate about making the transition as smooth as possible for our clients and we can’t wait to work with you!