Secret Way To Buy Solar | DroneQuote
By DroneQuote | Posted November 04, 2019
Secret Way To Pay For Solar
Different Ways To Buy Solar.
So you’re thinking about installing solar – well let me just share with you 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. The question that most people ask themselves when they are thinking to buy solar is how they are going to pay for it. There are different ways of paying to install solar, some of which include cash, different methods to finance solar, and of course, the solar lease.
The Solar Lease.
Many people install solar by using a solar lease option, also referred to as a power purchase agreement. While it is in our opinion that there are better alternatives to install solar than with a solar lease, it is a really good solution for people that don’t have a tax liability to take advantage of the solar tax credit you get when you install solar. To be clear, when you choose to install solar with any type of lease, be it a straight forward solar lease or power purchase agreement, you do not get the tax credit, besides the fact that payments tend to escalate every year.
Finance Your Solar Install.
Choosing to install solar through a purchase option, is in our opinion, the best way to go about it because you get to realize all the benefits of installing solar for your home. If you would like to install solar but don’t want to come out of pocket with a cash purchase, or don’t have that kind of money lying around, an excellent purchase 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 own pros and cons.
Solar loans come in varying term lengths and also varying interest rates, and like any other loan, the longer you extend the term, typically 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 by far where you get the most bang for your buck. This option has the quickest return on investment, costs the least amount of money over time, and simplifies the ownership of solar panels greatly – especially if you go to 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 do pay for solar with cash, however, once you reach your payback period then you are saving every month money you would otherwise pay to the utility. At that point in time, you are literally getting electricity for free out of the solar panels and really “sticking it” to the utility.
The Often Unmentioned Path To 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. If you guessed your home – or more specifically, your home equity, you are correct. Paying for solar panels by refinancing your home equity and pulling cash out can be one of the smartest ways to pay for your solar install, and what makes it even better, is you can use your home equity for more than just solar, like installing a new roof.
The reason it is a “secret” is due to the fact that most solar salespeople will stay away from mentioning this as a method to pay for solar. To be frank, it is not in the salesperson’s best interest to mention to you a payment method that will add time to the sales cycle when they can offer you loans that you can use which are far more expedient and far more convenient. Also, most homeowners don’t consider their own mortgage when they are looking to buy solar. Since there are many nuances to buy solar, it is easy to not think about other moving parts that would further complicate the process.
Why Is This Payment Method The Best?
We think it is better to buy solar (or install a new roof – or both) with your home equity for several reasons, but the first of which is that your money is less expensive than anyone else’s money – and using your home equity to buy solar is literally using your own money. Second, by using a cash-out refinance of your home’s mortgage, you are keeping a third-party out of the mix – the solar lender, which may complicate things at the time of sale, should you sell your home. Third the interest rate on a home mortgage is going to be more competitive than solar-only loans and of course, the interest on your mortgage is going to be tax-deductible whereas the solar loan is NOT.
SIDE NOTE: some solar salespeople may suggest a PACE loan (Property Assesed 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 if though they were Ebola.
Another reason why we encourage using equity financing to buy solar is that 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 value of the home – though value, like beauty, is in the eye of the beholder if you ask us. 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 in order 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 using a solar-only loan, though there are some candidates that are in better positions to take advantage of the “secret way to pay for solar”. The primary candidate is someone who’s interest rate was secured during a time 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 so that you can 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 of the matter is DroneQuote can offer you solar-only loans that require very little 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 of your mortgage takes more time than a simple loan application. There is typically an appraisal 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 – but the effort is well worth the benefit in our opinion – and in the opinion of most savvy consumers as well.
How Does This Method Work?
Using equity financing to buy solar starts off the same as any other method. DroneQuote provides you competitive quotes from multiple installers for your review. When we discuss the different payment options available, we may ask you some questions relative to your mortgage if you have expressed interest in learning more about using home equity to buy solar or put on a new roof. Since we are not mortgage experts, we will suggest different mortgage partners depending on the state you live in. If you learned about DroneQuote from an existing mortgage professional with whom you’ve worked in the past, we will reconnect you to that company and give them a brief run-down on our conversation. From there, they will let us (DroneQuote) and you, know if you would be better served by a solar-only loan or by using equity financing to buy solar or roofing.
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 and we at DroneQuote would work with him or her by giving them the details they need from us to get the cash-out refinance moving as quickly as possible. While this method does take more effort, it is our responsibility and our pleasure to do what is in your best interest so that you have an exceptional experience from beginning to end.
If you are already thinking to buy solar for your home, put on a new roof, or both, start by going to DroneQuote in order to get the most competitive quotes for solar or roofing without the hassle of sitting through multiple sales presentations. From there, you will see how easy we can make it to take control of your cost of electricity or replacing a roof that is end-of-life. Learn more at www.dronequote.net and see how we offer the smart way to get solar and roofing quotes.
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