Different Ways To Buy Solar
So you’re thinking about installing solar – Let me share that you are in good company.
There is currently enough Solar installed in the United States to power 13.1 million homes. This is mainly due in part to the high cost of electricity in states like California, Hawaii, and Rhode Island. There are different ways of paying to install solar, including cash, other methods to finance solar, and the solar lease.
The Solar Lease
Many people install solar by using a solar lease option, also referred to as a power purchase agreement. The solar tax credit you get when you install solar is an advantage. While there are better alternatives to installing solar than a solar lease, it is a perfect solution for people who don’t have a tax liability.
To be clear, when you choose to install solar with any type of lease, a straightforward solar lease or power purchase agreement, you do not get the tax credit. Payments also escalate yearly.
Finance Your Solar Install
A purchase option is the best way to install solar. You get to realize all the benefits of installing solar for your home. But, if you would like to install solar without a cash purchase, or money is not lying around, an excellent option for Solar is to finance. In today’s day and age, there are several solar loan options to choose from – each of which has its pros and cons.
Solar loans come in varying term lengths and also varying interest rates. Like any other loan, the longer you extend the term, the higher the interest rate. Solar loans are also subject to creditworthiness, so the better your credit, the lower the interest rate you may qualify for the solar loan.
Pay Cash For Your Solar Install
Paying cash to install solar is where you get the most bang for your buck. This option has the quickest return on investment, costs the least money over time, and simplifies the ownership of solar panels considerably – primarily if you sell your house. The hardest part to overcome when you buy solar with cash is ponying up the cash price of the solar installation cost. If you pay for solar with cash, once you reach your payback period, you are saving money you would otherwise pay to the utility every month. Then, you are literally getting electricity for free from the solar panels and “sticking it” to the utility.
Buy Solar Cash VS. Utility Rates
The Often Unmentioned Path: Buy Solar (or pay for a new roof)
What Is The Secret Method To Buy Solar?
So now we know the best way to install solar is by paying for it in cash. So what is the “secret way to pay for solar,” you ask? I’ll give you a clue; you are literally living in it. You are correct if you guessed your home – or, more specifically, your home equity. Paying for solar panels by refinancing your home equity and pulling cash out can be one of the most innovative ways to pay for your solar installation. What makes it even better is you can use your home equity for more than just solar, like installing a new roof or other home upgrades.
It is a “secret” because most solar salespeople will avoid mentioning this as a method to pay for solar. Honestly, it is not in the salesperson’s best interest to be upfront with a payment method that will add time to the sales cycle. They will offer you loans you can use, which are far more practical and convenient.
Also, most homeowners don’t consider their own mortgage when looking to buy solar. Since there are many nuances to purchasing solar, it is easy to not think about other moving parts that would further complicate the process.
Why Is This Payment Method The Best?
First, buying solar with your home equity is less expensive than anyone else’s money. Using your home equity is buying solar with your own money.
Second, you keep the third party out of the mix when you use a cash-out to refinance your home’s mortgage. The solar lender, the third party, in this case, may complicate things should you sell your home.
Third, the interest rate on a home mortgage is going to be more competitive than solar-only loans. Of course, the interest on your mortgage will be tax-deductible, whereas the solar loan is NOT.
SIDE NOTE: some solar salespeople may suggest a PACE loan (Property Assessed Clean Energy) because the interest “is tax-deductible.” These loans are akin to the devil – they are the worst possible method of paying for anything relative to your home. Steer clear of PACE loans as though they were Ebola.
Another reason why we encourage using equity financing to buy solar is because you are improving your home with the money you are taking out of the equity. This is a good thing, especially when tied to solar panels because studies suggest that solar panels increase the home’s value. If that isn’t reason enough, using a cash-out refinance to buy solar does not force you to apply the solar tax credit to the principle to keep Levelized payments in place, which solar-only loans will require you to do so.
Who Can Benefit From Equity Financing?
We believe most anyone can benefit from using their home’s equity to buy solar versus a solar-only loan. However, some candidates are better positioned to take advantage of the “secret way to pay for solar.” The primary candidate is someone whose interest rate was secured when rates were higher. Today (Nov. 3rd, 2019), rates are lower than they have been in quite some time. Imagine refinancing your home’s mortgage and saving money there PLUS having the ability to buy solar with cash to save additional money on the cost of electricity. You could put all those savings back into your mortgage, pay off other debt, beef up your retirement account, save for the kid’s college, or some other fiscally responsible action.
Is It More Effort To Buy Solar With Equity Financing?
Yes. The fact is that DroneQuote can offer you solar-only loans that require minimal effort. A simple credit inquiry, and if you pass (requires a minimum credit score of 650, usually), then you are good to go. It’s that easy, but as we know, easy is not always best.
A cash-out refinance your mortgage takes more time than a simple loan application. But the effort is well worth the benefit. An appraisal is required; income verification, a period of no late payments on the mortgage of at least 6 months, a loan to value of X percentage, a debt-to-income ratio in check, and a few other requirements.
How Does This Method Work?
Using equity financing to buy solar starts the same as any other method. DroneQuote provides you competitive quotes from multiple installers for your review. We may ask you questions about your mortgage when we discuss the different payment options available.
Suppose you learned about DroneQuote from an existing mortgage professional with whom you’ve previously worked. In that case, we will reconnect you to that company and give them a brief run-down on our conversation. From there, they will let us (DroneQuote) know if you would be better served by a solar-only loan or by using equity financing to buy solar or roofing. Since we are not mortgage experts, we will suggest different mortgage partners depending on your state.
If it turns out you would benefit from using equity financing to buy solar or pay for your roof, then you would start the process with your mortgage professional. We at DroneQuote would work with them by giving them the details we need to get the cash-out to refinance moving as quickly as possible. While this method takes more effort, it is our responsibility and pleasure to do what is in your best interest. We guarantee that you have an exceptional experience from beginning to end.
If you are already considering buying solar for your home, putting on a new roof, or both, start by going to DroneQuote to get the most competitive quotes for solar or roofing. From there, you will see how easy we can make it to take control of your electricity cost or replace an end-of-life roof. Learn more at www.dronequote.net and see how we offer an intelligent way to get solar and roofing quotes.
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