Home Equity for Solar

Our friends at Pure Energies note the following about using a HELOC (Home Equity Line of Credit) for solar. Our comments are italicized.

Home equity is the conventional means by which most people have purchased solar systems in the past. 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 in this, ask your banker or loan officer about it. More and more banks are getting on board with solar.

Maybe you’re thinking “how much VALUE does a solar system add to my home?” Solar is a relatively new commodity, and there has not been a lot of turnover yet in homes with solar, so the data is not very deep. 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 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.

If a solar system saves you $1,000 a year in energy, it adds $20,000 to the value of your home. Think about that. Few home improvements both add value to your home AND produce a valuable commodity year after year. With solar, you can be saving energy costs AND enhancing your home’s value over time. How many other investments do that?

Solar adds value while it also shows your values
Solar adds value while it also shows your values

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