The Dirty Truth about Installing Solar Panels and What it Can do to Your Credit
Protect your self from some of the devastating effects of solar installations on your credit! So many people are treating solar panels as the new panacea for energy bills, and it is great that more and more of us are becoming increasingly energy efficient and hopefully saving quite a bit too. However, a dirty little secret of the solar industry is that solar liens that are attached to your property tax bill can inhibit your ability to refinance and in some cases may even stop you from being able to sell your home, even in a squeeze.
Here’s why: When you have solar installed with one of the government approved programs, like California’s Pace Solar, the lien can take priority over your mortgage since taxes take priority over mortgages.
This is a huge stop sign, not just a red flag for many lenders because it means that in the event of a foreclosure, the lender’s share of sale proceeds could be severely diluted as a result of the priority to pay the solar first.
Lenders hate taking that kind of risk, so most just decided they wouldn’t help those clients who have most solar liens.
Unfortunately, this often hasn’t been communicated to homeowners during the solar sales pitch. That means tons and tons of consumers who thought they were doing the financially and ecologically responsible thing in getting solar, now find themselves in a very difficult and unfair position of not being able to take advantage of lower interest rates, or even in many cases from being able to sell their houses without much hassle. Why does it make it harder to sell you ask? Simply put, most buyers need financing to purchase. Some sellers have resorted to including the remaining balance in their sales price, but often that is not a reasonable option for many home sellers.
Find out if you can finance after solarFortunately, the issue has become such a sore spot that federal related loan agencies have now taken steps to allow for financing after such programs. This has slowly started trickling down to some lenders taking on financing homes with solar liens again. So before you buy into solar, make sure to talk to your lending expert and make sure you are picking the right program for your family.
Oh, by the way, leased solar panels haven’t fared much better, check out this article from the Washington Post on how leased solar panels have also inhibited home sales:
“Some would-be buyers balk when they learn that they’ll need to qualify on credit to take over your solar lease payments for the next 15 to 17 years. Others say they like the house but won’t sign a contract unless you buy out the remaining lease payment stream — $15,000 or $20,000 or more — because they’re worried that the solar equipment will become obsolete or won’t save as much on electricity bills as advertised.”
