Those currently looking into solar financing will be happy to discover that there are now plenty of solar loan options.
In the past, there were only two realistic options – pay cash or sign an expensive, long term lease contract.
There are now plenty of lending institutions offering a variety of different ways to finance solar. Two primary options exist for residential solar power lending – secured financing and unsecured financing. Most of the best options available are in secured financing. While long term savings are higher in secured lending, unsecured lending is another option that may be better suited to some borrowers. Let’s take a look into secured solar lending options.
Secured Solar Financing–
- Home Equity Loans
- Home Equity Line Of Credit (HELOC)
- FHA Title 1 Loans
- PACE Loans
Home Equity Loans are often called second mortgages. Homeowners with sufficient available equity can apply for a second mortgage for major home improvement projects like solar panel installation. As the nation continues to recover from The Great Recession, more homeowner will continue to see an increase in available equity. Repayment periods are typically 10-15 years.
Home Equity Lines of Credit is another way that a homeowner may finance a solar panel system assuming there is adequate home equity available. A HELOC allows homeowners to draw from a line of credit via a checkbook or credit card. Homeowners are only charged interest on the amount that is used. Terms are also typically 10-15 years.
FHA Title 1 Loans are another type of secured loan insured by the Federal Housing Administration. These special secured loans can be seen as being advantageous because a homeowner cannot be foreclosed on by defaulting on this loan. This loan program is more commonly called PowerSaver in regards to solar panel installations.
PACE Loans – Property Assessed Clean Energy – is another way in which a homeowner may finance a solar power project. In this program, a solar panel system is financed through an assessment added to a homeowner’s property tax bill. Unfortunately, many municipalities have yet to offer this to residents, so current availability is limited.
As previously mentioned, there are now plenty of ways for a homeowner to gain access to solar panel loans. These include major national lenders like Admirals Bank, Green Sky Credit, Digital Federal Credit Union, and Enerbank, to name a few. Many credit unions also offer solar financing options. It’s also possible to apply for a loan with many different solar panel manufacturers. Most solar loan programs call for a credit score of at least 660.
Homeowners do not need to worry about dealing with the research involved with solar power financing. This is because their local solar panel installers have done the research for them. A trusted installer will already know which are the best lending options available. They will also help with the application process and paperwork involved.
So what does a typical monthly payment situation look like?
For shorter term loans of 5 to 10 years, payments on a solar loan will be about the same as what many homeowners currently pay their utility. The long term benefit after a ten year period is virtually free energy (grid tied customers still pay a small amount to a utility). After the first 10 years, you can expect 15 to 20 years of paying next to nothing for electricity. This amounts to many thousands of dollars in savings.
It’s also possible for payments on solar power loan to be less than current electricity bills with a longer term loan. However, total savings are less because more is paid through interest over a longer loan term.
As you can see, financing is no longer a barrier for many homeowners who wish to get solar panels installed on their homes. In addition to being the right environmental move, investing in solar panels is also a wise financial decision.