Want to put solar panels on your roof — owning them outright rather than having to lease from some third-party company? There’s a new home mortgage program that’s just hit the market and could help make that happen. And since it’s long-term mortgage money, the interest rates are similar to those on a regular home loan — currently in the mid- to upper 3 percent range if you’ve got good credit.
Equally important, you end up pocketing the generous 30 percent federal investment tax credit that’s available for owners who install solar panels, unlike when you lease them. Plus you can add demonstrable equity value to your home, save on utility bills, and avoid the hassles and potential buyer objections to taking over your payments on leased panels when you sell your home.
The new program, known as the HomeStyle Energy Mortgage, comes from giant investor Fannie Mae. It’s useful for far more than solar panels, too. Say you’re buying or refinancing a house and you see the need for energy-saving renovations.
Rather than having to pay for these upgrades out of pocket, or borrow at unfavorable interest rates, you can essentially roll them into a new mortgage. In recognition of the value being added to the property by virtue of cutting utilities bills for the long term, participating lenders will let you borrow more than on a standard mortgage.
There are some special requirements and limitations of course: Borrowers can only receive up to a maximum of 15 percent of the as-completed appraised value of the home to use for the upgrades. The portion of the loan amount designated for energy improvements must be placed into an escrow account overseen by the lender. Appraisers must also determine the as-completed, enhanced valuation of the property expected after the improvements and verify that they were indeed completed. When upgrades are made that cost more than $3,500 in total, an energy efficiency analysis is required, such as a HERS (Home Energy Rating Systems) report.