Home Equity Loan
Solar installation companies can either point you to an independent home equity loan provider or they may have their own partnership with a provider that they prefer to work with. Many homeowners choose to find their own servicer or use their existing line of credit to purchase a solar system.
Home equity is the conventional means by which most people have purchased solar systems in the past.
could certainly find a universal provider (and we may do that in the future), but this type of financing is so ubiquitous that we didn’t see how forming a partnership in the area something that would cause the tipping point in solar — which is what we’re all about.
So what’s new in using home equity financing for solar?
Some home equity loan products are beginning to take into account the value the solar energy system adds to your home into their cumulative loan-to-value ratio (CLTV) calculations. This means more people would qualify for a loan with these products. If you’re interested, talk to an installer or a bank that offers these loan products.
Maybe you’re thinking “how much value DOES a solar system add to my home?” Well, there’s not a ton of turnover yet in homes with solar, so the data is not very clear. But a number of studies over the last few years suggest that solar homes sell faster and for more money than non-solar homes. One summary in an appraisal journal article written a few years ago that states that any energy improvement made to your home adds 20 times the yearly energy savings in value. So if you were to install double-paned windows that save you $300 a year in utility expenses, that adds $6,000 in value to your home.
So if a solar system saves you $1,000 a year in energy, it adds $20,000 to the value of your home. Few home improvements both add value to your home AND produce a valuable commodity year after year.
