Financing the purchase of your solar energy system
Financing the costs associated with purchasing a solar energy system may be made easier through an Energy Efficient Mortgage (EEM) or a number of other options.
A typical PV system can cost anywhere from $20,000 to $50,000, depending on size. Financing these costs may be made easier through an Energy Efficient Mortgage (EEM) and a number of other options.
There are several different kinds of EEMs, though they are all designed with a common goal in mind: making it easier and for homeowners and homebuyers to undertake energy-efficient projects in their homes.
The catch for these EEMs is that, in order to qualify for them, your house must be rated for its energy usage. Obtaining the rating—which ranges from 1 to 100 and scores everything from insulation to the type of appliances you use—costs several hundred dollars. A common rating is the Home Energy Rating System (HERS). A qualified energy auditor will come to your home and conduct a thorough review. Plus, the final HERS report will suggest measures that are likely to make the biggest improvements in your home’s energy usage. To find a qualified HERS rater in your area, click here.
One final condition is that your proposed improvements must be considered “cost effective†by EEM standards. Basically, this means that the resulting monthly savings in energy bills must be greater than the added monthly costs of the EEM. Total savings over time must also be greater than the improvement’s total costs.
Conventional Energy Efficient Mortgages
Conventional EEMs are intended for buyers interested in buying an energy-efficient home. Essentially they increase purchasing power by permitting lenders to increase the borrower’s income by a dollar amount equal to the home’s estimated energy savings. Convential EEMs are offered by lenders who sell their loans to Fannie Mae or Freddie Mac. Moreover, the Fannie Mae loan is adjusted so that the value of the energy-efficient measures is reflected in the overall home value.
Federal Housing Authority EEMs
FHA EEMs exist to provide financing for homeowners who seek to implement energy-efficiency improvements. Lenders are allowed to add 100 percent of the cost of the improvements to an already-approved mortgage loan—provided that the costs don’t exceed $4,000 or five percent of the value of the home, up to $8,000, whichever is greater. Particularly important: (1) no additional down payment is required, nor do you have to re-qualify; (2) loan limits may be exceeded.
Veterans Affairs EEMs
VA EEMs are available to qualified military personnel, reservists and veterans for energy-efficiency improvements when purchasing an existing home. Up to $3,000 of the improvements may be financed solely on the basis of documented costs, while $6,000 may be financed if the upgrades are deemed “cost effective."
To review: if you’re looking into installing a photovoltaic (PV) system, chances are you’ve already learned that they require a sizeable upfront cost: a typical system can run you $25,000 or more. You also probably know, however, that once its installed your monthly energy bill will be a fraction of what it once was—and that, in the long run, you’ll likely end up saving money. More good news: as interest in solar continues to grow, more and more private lenders are likely to enter the market.
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