Over the past several years, Solar Energy in residential areas has experienced exponential growth. In fact, 2020 was reported as one of the biggest years for solar, with 43% growth.
As more and more people turn to solar energy, purchasing or refinancing a home with solar panels will become more common. Even though this is a great environmental stride, there are some things that home owners should consider when they go to refinance or sell their home if they have invested in solar panels.
Refinancing a Home with Solar Panels
Whether you have leased or purchased solar panels, refinancing your home will be a little more involved. If you purchased your solar panels utilizing a loan, this is technically considered a second mortgage requiring a subordination agreement signed by the solar company and could affect your rate. While quite common, this could affect the amount of equity available to you, and may affect the rate. Many homeowners will pay off the remainder of the loan before refinancing, however, this option may not be for everyone. When you do make the decision to refinance, be up front about the solar panels on your property, and work with your lender to find the best solution.
For folks who are leasing solar panels or utilizing a power purchase agreement (PPA), you will most likely have a UCC-1 fixture filing placed on your home, which is a type of lien that gives the solar company permission to repossess the panels if you are unable to keep up with the lease payments. This could cause an exception on the title policy and require possible termination of the lease prior to closing. . The best thing you can do is make sure to talk about your solar panels with your lender right away and provide a copy of your agreement, so that you can avoid confusion and frustration down the road.
Selling a Home with Solar Panels
If you are planning on selling your home, and you have solar panels installed on your property, some up-front work may be required so that the process goes smoothly. For example, if you are leasing solar panels, check the lease agreement to see if it can be transferred to the new owners, or if you need to buy out of the agreement. Additionally, if you are planning on getting a tax credit for your solar panels, then you may need to determine who is eligible for that tax credit once the home is sold.
Additionally, being open about your solar panels with realtors and potential buyers will help the selling process overall. Doing some light research and reading your agreement you signed with the solar company ahead of time will allow everyone to plan and make the appropriate arrangements, so that there are no surprises on closing day.
Blackhawk Bank is Here to Help!
Solar panels are a great way to lower energy costs and make your home environmentally-friendly, but it can feel overwhelming navigating a refinance or the sale of a home. Blackhawk Bank is here to help. We want you to enter the housing market confident and at ease, and our Mortgage Planners a will guide you through the entire process. Are you ready to learn how Blackhawk Bank can help you? Contact us today!
Author:
Tammy Zurfluh
NMLS#476483
SVP Mortgage Banking