Solar

Solar Panels: Pros & Cons

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As the cost of electricity increases, more homeowners are thinking about purchasing solar panels or enrolling in a solar lease program. Before committing your time, effort and money, consider these solar panel system pros and cons:

PROS

  • Solar panels add value to your home. Nine out of ten homebuyers prefer to purchase an energy-efficient home even if the price is 2%-3% higher than a similar non-energy-efficient home, according to the National Association of Home Builders.
  • The federal government offers a 30% Investment Tax Credit against your personal income taxes on the purchase of a solar panel system.
  • Solar lease programs offer a no-money-down option, a locked-in reduced electrical rate and a full warranty for the duration of the lease.
  • Solar panel systems save you money on your monthly electrical bill. A solar lease provides an average 15% savings on monthly utility costs. The savings are even higher for panels that are purchased outright. However, this is offset by the cost of the panels. California is also a “net metering” state which means you receive credit on your electric bill for any excess energy your solar panels produce.

CONS

  • Solar panel systems can cost $15,000-$30,000 installed.
  • You may have to perform costly roof repairs before you can install solar panels.
  • Solar lease contracts may cause a delay in closing or even cancellation of a pending home sale. Some buyers may not qualify to assume your solar lease. However, most solar companies will allow you to buy your solar panel system if you are interested in converting the lease. In this case, you will then need to negotiate with the buyer the price they are willing to pay for the existing system.
  • Solar panel systems are long-term investments. On average, it takes a homeowner 20 years to pay off the full cost of a solar panel system. Solar leases eliminate the investment aspect, but still require a similar, lengthy commitment.

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Guild Mortgage Launches FHA Solar Program for Homebuyers

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Guild Mortgage, one of the largest independent mortgage lenders in the U.S., has announced FHA Solar, an innovative mortgage program that will allow homebuyers to include solar panels in their mortgage loan amount.

Available to residents in California, Guild’s FHA Solar program provides homebuyers with the flexibility and convenience of combining the financing for their home and solar panels into one, single transaction. With the program, solar panels can be added to any home, providing buyers interested in investing in renewable energy with more options. Another benefit of the Guild program is that homebuyers can purchase panels at lower costs than alternative programs.

Guild’s FHA Solar program adheres to Federal Housing Administration loan requirements and offers down payment options as low as 3.5 percent. The down payment is based on the purchase of the home before the panels are added into the cost of the mortgage.

“This program will give more options to homebuyers looking for solar because it gives them the flexibility to purchase panels and add them to any home they choose,” said Mary Ann McGarry, Guild’s president and CEO. “FHA Solar is ideal for individuals who are looking to buy a home that they plan to live in for several years and realize the return on their investment. It will also be attractive to customers who want to lower their monthly utility bill and have a greener footprint.”

David Battany, Guild Mortgage’s executive vice president of capital markets, said FHA Solar is a result of the company’s efforts to continue to expand its array of loan options to better serve future homebuyers, a Guild tradition.

“Research shows an increasing number of people are looking for homes with solar installed, and we expect that trend to increase over the next five to 10 years,” he said. “Few lenders currently offer programs for the purchase of solar panels with a new home. We see this as a great opportunity to serve the next generation of homebuyers.”

Other programs, such as PACE loans typically charge the borrower interest rates that range between 8 and 12 percent. Homeowners who invest in solar panels after the purchase of their property often finance the panels through a second trust deed, also at higher rates.

FHA loans are government loans widely used by first-time homebuyers, borrowers with low-to-moderate incomes or those with down payments of less than 20 percent of the purchase price.

They can be easier to qualify for than a conventional conforming loan, but also require upfront and annual mortgage insurance premiums. FHA loans are attractive because they offer low down payment options and financing up to 96.5 percent of the purchase price.

A top-10 national lender by purchase loan volume, Guild offers first-time homebuyers a wide range of loan options and personalized service. Its loan professionals can serve the needs of any homebuyer, from helping first-time homebuyers achieve homeownership, often through government loan programs, to homebuyers looking to upgrade with a jumbo loan. Guild also specializes in helping active duty and retired military personnel to secure VA loans, with 100 percent financing and flexible qualifying standards.

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