Series Introduction: This article is part of a 10-part series to shed some light on what your solar salesperson is NOT telling you. It is my hope this will help consumers to better understand the “small print” items when deciding if installing Solar panels is the right decision for you and your family.
Solar Panels have recently become more affordable and easier to obtain for homeowners. It is hard not to get sucked in by commercials with uplifting oldies blaring and people dancing and singing the praises of a Solar Life with the spokesperson declaring it is now an affordable option for homeowners. As a REALTOR® I have been asked by many past and present clients if they should do this? This series will cover the following issues of the solar home craze. You can also click topics below to jump to that particular topic.
What’s the catch?
Potential savings or smoke and mirrors
What’s the real cost?
Life expectancy and maintenance mortgage and appraisal pitfalls
How does this affect my homeowner’s insurance?
What sellers need to know?
What home buyers need to know?
Less expensive alternatives to solar panels.
Why I made the decision I made regarding Solar Panels.
What to know when selling your home that has a Solar Panel Loan.
When you sell your home, you will need to disclose that you have the expectation that the buyer will assume the loan for the system on top of their mortgage. Or you will need to be sure the selling price covers both. Qualified home buyers typically must have a credit score of 680 or above so they should theoretically qualify to assume your Solar panel lien. I suggest you have an attorney review your loan agreement with the solar company to see if it can be transferred or if you will continue to be responsible for the loan.
Attorney Vivian McBride of the Legacy Law Firm had this to say about passing on loans. “Often the original debtor remains responsible for payment of the loan. While the loan is secured by a lien on the property, the original debtor is personally responsible for paying off the loan. The only way to avoid this is to pay off the loan before or at the time the home is sold. In addition, I don’t believe the new buyer’s lender will allow that lien to remain on the property. The lender always wants to be in first position when they finance the purchase of a house. The solar panel loan will remain in first position unless the solar panel company agrees to subordinate their loan to the new lender. I would caution anyone purchasing the solar panels to have an attorney review the loan agreement prior to signing so they understand the long term ramifications of the lien they are agreeing to place on their home.”
WHAT HAPPENED TO THE EQUITY IN MY HOME
Another thing to consider is what affect the solar system loan has on your home equity. How much equity do you have in your home now? Let’s break it down. Ten years ago you bought your home for $280,000 home and put 20% down ($56,000) and over the years you have paid down principle to $200,000. You have $80,000 of equity in your home (roughly 28%). Now add the $73,000 solar system loan secured by your home. You now have $273,000 in loans on the property. You’ve now reduced your equity to $7,000 which is only 2.5%. The equity you once had in your home is now gone. This will affect your ability to refinance and use the equity for other home improvements.
Our mortgage lender, Nancy Crawford reminds us that when you refinance whether it’s for home improvements or merely to obtain a lower rate and lower payment, you will have to get the fiancé company for the Solar Panels to subordinate (accept their loan is in the second position) each time and if they refuse, you won’t be able to refinance.
Hopefully you found this to be a helpful series, I would love to see your comments and hear about your experiences so others can benefit from your stories as well. Direct links to each topic in this series. Also, I would love for you to subscribe to be notified when new posts are available or follow. Look on the top right to do that.
SOLAR PANELS – What’s the catch?
SOLAR PANELS – Potential savings or smoke and mirrors
SOLAR PANELS – What’s the real cost?
SOLAR PANELS – Life expectancy and maintenance
SOLAR PANELS – How does this affect my homeowner’s insurance?
SOLAR PANELS – What sellers need to know?
SOLAR PANELS – What home buyers need to know?
SOLAR PANELS – Mortgage and appraisal pitfalls
SOLAR PANELS – Less expensive alternatives to solar panels.
SOLAR PANELS – Why I made the decision I made regarding Solar Panels.
Have you thought about selling your home?
What if I told you I could sell it for more than it is worth?
Check your home Value here
You can always browse area homes for sale here
Looking to buy a home with “Green Features? Browse Green homes here
Have no idea where to start? Call or Text Home Help to 314-963-7300 to set up a FREE consultation