Mortgages & Refinancing with Solar Energy

Having a solar energy system on your home when you refinance can help improve the value of your home giving you more money if you're doing a cash-out refinance. The increase in home value is a big motivator in installing solar.

Solar Energy and Home Value

Solar energy systems impact the value of your home by increasing the property value. Despite the high initial investment, adopting solar energy can decrease utility costs and increase the overall value of your home. Studies and research have shown the positive correlation between solar installations and property value. According to the National Renewable Energy Laboratory, your home’s value increases by $20 for every $1 that is saved on energy bills. It is important to consider solar energy as a factor in mortgage financing and refinancing decisions.

Solar-Friendly Mortgages

There are many solar-friendly mortgages available. Energy-efficient mortgages provide financing in favor of energy-efficient home improvements. In order to qualify for an EEM, the proposed project must save more money than what it costs. Home renovation mortgages are another option when it comes to solar loan refinancing and a solar energy system addition can qualify as a home improvement. In order to obtain a solar-friendly mortgage, it is important to research and understand the benefits and eligibility criteria.

Refinancing with Solar Energy

When refinancing, there is the option to include solar energy system costs. Refinancing and receiving a lower interest rate can help bring down the overall costs of the system. Other available loans may extend the repayment terms which may be beneficial to those who are concerned about the initial costs. If you are looking to refinance with solar energy, it is important to work with experienced professionals to understand the process and considerations involved. 

Financing Solar Energy Systems

When financing a solar energy system installation, there are many available financing options. Solar loans may be secured through the installing company or from the bank. A collateral is provided for the loan typically in exchange for a lower interest rate. Solar leases means that you do not own the solar energy system installed at your residence and instead pay a flat monthly rate to use the electricity. Power purchase agreements allow customers to purchase the electricity that is output from a solar energy system that they do not own.  It is important to understand the financial implications and terms of different financing options before entering into a contract. 

Lenders and Institutions Supporting Solar Financing

Lenders and financial institutions offer special financing options. Government funded programs such as Property Assessed Clean Energy Loans can be acquired through private lenders. Oftentimes other lenders and institutions offer solar loans with a variety of interest rates, so it is important to research before signing a loan. It is worthwhile to take time to research various lenders and financial institutions to compare options and find the one that is most suitable for you.

Considerations for Solar-Financed Mortgages

It is necessary to address the considerations and potential challenges in obtaining a mortgage or refinancing with a solar energy system. Entering into a financing option may not result in saving money right away. While utility costs may decline, depending on the interest rate, loan amount and loan length, monthly payments could be just as expensive as a traditional energy source. Homeowners may also not receive a positive return on their investment until a loan is paid off. Proper documentation and disclosures during the mortgage application or refinancing process are essential to have successful experiences. 

Bottom Line

Mortgages and refinancing with solar energy significantly encourages the adoption of solar energy systems. Many options are available and it is important for individuals, homeowners, and investors to explore solar-friendly mortgage options and refinancing opportunities. Incorporating solar energy into mortgage financing and refinancing decisions helps to promote sustainable homeownership.