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Refinance Your Home with Solar Panels for Greater Financial Efficiency

In the ever-changing world of homeownership, where sustainability meets smart financial planning, exciting new opportunities are emerging. One growing trend is the integration of solar panels into the process of refinancing.

If you ever decide to revisit and adjust your home loan while navigating your solar loan agreement or lease, Forme Solar is here to assist you every step of the way. While adding a solar loan or lease may bring an extra layer of complexity to the refinancing process, with careful planning, it doesn't have to be a major hurdle.

This guide is designed not only to address the central question, "Can I refinance my house with solar panels?" but also to explore how this combined approach can lead to increased financial efficiency.

Refinancing with Solar

Refinancing a home equipped with a solar panel system demands thoughtful planning to ensure a smooth process. As a homeowner, dedicating extra time to review the initial paperwork surrounding the solar panel acquisition is crucial. Understanding the financing option chosen during the transition to solar is paramount. Depending on the specifics, collaboration with the solar company may be necessary to temporarily lift any liens linked to the solar system.

Once armed with a comprehensive understanding of the solar acquisition, the next step involves engaging with the chosen lender. This critical liaison plays a central role in tailoring the refinancing process to the unique circumstances of the homeowner. The collaboration aims to address potential liens seamlessly and craft a refinancing strategy that accommodates the solar investment. By navigating this partnership successfully, homeowners can ensure a harmonious integration of their solar objectives with the broader financial refinancing goals.

In essence, the journey of refinancing a home with solar panels involves meticulous coordination between the homeowner, solar company, and lender. This proactive approach not only streamlines the refinancing experience but also underscores the commitment to financial prudence and sustainable living.

Remove Any Equipment Liens:

Advancing through the refinancing process for a home that features solar panels, the subsequent crucial step involves temporarily removing any liens associated with the system. These restrictions linger on the solar panel installation until the loan initially used for their acquisition is fully repaid. Fortunately, seeking this adjustment is a straightforward procedure, especially when collaborating with the manufacturer of the solar panels.

Essentially, the act of removing equipment liens signifies a fundamental step in the refinancing process for homes equipped with solar panels. It underscores a proactive measure to address any financial complexities tied to the initial solar investment, providing homeowners with a clearer path toward a polished and efficient refinancing experience.

Collaborate with Your Lender for Refinancing:

Once you've gathered details about the acquisition of your solar panels and reached out to your panel manufacturer for guidance on removing liens, the next step is to engage with your chosen lender to explore refinancing options for your home.

Providing your lender with information about your home's solar panels is essential to ensure a smooth refinancing process. Following these straightforward steps facilitates securing the new financing for your home that you've been seeking!

As previously mentioned, the refinancing process varies depending on how you acquire your solar panels. If you've paid for them in cash, the process may involve fewer steps, while leasing solar panels might entail additional steps.

Now, let's explore how the different purchasing options can impact the home refinancing journey.

How To Refinance With Solar Panels?

A stack of bills topped with a solar panel.
A stack of bills topped with a solar panel.

Refinancing Solar Panels Purchased with a Cash

While it's not a common scenario, a select group of homeowners has the financial capacity to buy their solar panel system outright. Being the outright owners simplifies the refinancing process significantly.

In this scenario, your lender typically views the solar panels as a comprehensive home upgrade, attributing a higher value to your property.

This enhanced valuation proves beneficial when pursuing refinancing, potentially securing more favorable loan terms.

Refinancing with a Solar Loan

While we'll explore the specifics of this equipment lien shortly, it's crucial to note that it doesn't hinder your ability to refinance. It simply adds an extra step to the process. If you've financed your solar panels with a loan, collaboration with your solar loan lender becomes necessary to temporarily lift the lien before proceeding with the refinancing process through your chosen lender.

Alternatively, homeowners can choose to settle the loan balance, eliminating any existing liens. This not only removes obstacles but also streamlines the refinancing procedure, making it even more straightforward.

A house with solar panels on the roof.
A house with solar panels on the roof.
A sign displaying a house with coins in front of it, indicating options for refinancing or installing solar panels.
A sign displaying a house with coins in front of it, indicating options for refinancing or installing solar panels.

Refinancing with a Solar Lease

Choosing to lease solar panels through a power purchase agreement (PPA) for your home is a popular option in states where it's available. While it brings environmental benefits, requires no upfront costs, and offers cheaper power, it can add a layer of complexity to the refinancing process compared to other financing options.

No need to worry—you can still refinance your home with a solar PPA. Take a proactive approach by gathering all the details about your lease terms before meeting with your refinancing lender. Keep in mind that each lender has its unique requirements, which may involve additional steps in your refinancing journey. Staying organized with the necessary steps and information can make the refinancing process a bit more challenging but still manageable and achievable.

Solar Panels Typically Boost Home Valuation

Addressing a fundamental aspect, it's crucial to acknowledge that the enduring savings generated by solar panels exert a positive influence on a home's overall value, and this assertion is substantiated by compelling evidence.

According to insights from the National Renewable Energy Laboratory, the incremental increase in a home's valuation amounts to $20 for every $1 conserved in energy bills. To illustrate, if a homeowner manages to save $700 annually in electricity costs, the mere presence of solar panels translates to a commendable $14,000 augmentation in their home's value. This tangible enhancement underscores the substantial financial benefit that solar panels can deliver.

A recent in-depth study conducted by Zillow in 2021 sheds light on the evolving priorities of homebuyers. Notably, 67% of individuals in the market for a home consider energy efficiency to be a factor ranging from "very to extremely important" in their decision-making process. Additionally, an estimate proposes that prospective homebuyers exhibit a willingness to pay an extra 4.1% for a house integrated with solar panels, emphasizing the growing significance of sustainable energy solutions in the real estate landscape.

Furthermore, a sweeping home solar study undertaken by the U.S. Department of Energy's Lawrence Berkeley National Laboratory takes the valuation impact a step further. The findings indicate that potential homebuyers may express readiness to pay a premium of $15,000 or more for a home outfitted with solar panels. This underscores not only the tangible financial appreciation but also the perceived value and appeal that solar panels bring to residential properties.

How Financing Options Impact Home Valuation and Refinancing

The choice of financing for your solar system, whether purchased outright with cash or through a solar lease, introduces distinct implications for home valuation and the refinancing process.

Crucially, to include the solar system in a home sale, ownership is a prerequisite. If you financed the system through a lease, the panels are owned by your solar provider. In such cases, homeowners have two options:

  • Buy out the Lease: This involves acquiring ownership of the solar panels from the provider, which can incur a substantial cost, particularly dependent on the remaining lease duration.
  • Transfer the Lease to the New Owner: An alternative is transferring the lease to the new homeowner, a process that comes with specific qualifications dictated by the solar provider.

The cost of buying out a lease can be notably high, depending on the remaining duration. Additionally, transferring the lease to a new homeowner involves meeting specific qualifications set by the solar provider.

Valuation is also influenced by property taxes, with solar systems contributing to increased home values, subsequently leading to higher property taxes. Nevertheless, it's worth noting that 36 states have implemented laws that either wholly or partially exempt solar owners from additional property taxes.

An essential consideration is that homes featuring modern solar panel systems tend to command higher valuations compared to those with older systems. Given that solar systems typically have a lifespan of 25 to 35 years, proactive maintenance, including routine cleaning, is imperative to ensure sustained and increased home valuation.

Interest Rates for Refinancing a Solar Loan

While interest rates for refinancing solar loans can differ significantly across various options, they generally fall within reasonable bounds. It's important to keep in mind that factors like your home equity, existing mortgages, and the current interest rate on your solar loan can impact the refinancing interest rate.

In most cases, you can anticipate interest rates ranging between 5% and 8%, contingent on the lender and your specific financial situation. However, these figures can vary, so it's advisable to take the time to thoroughly research potential lenders and understand their refinancing terms. Finding the best deal is crucial, and tailoring the refinancing approach to suit your solar loan and mortgage status is key to making a well-informed decision.

Final thoughts...

Facing the prospect of refinancing your home, particularly with the presence of solar panels, might initially seem challenging. The good news is, you don't have to tackle this process alone—Forme Solar handles such situations routinely. We'll team up with you to address any equipment liens and establish favorable refinance terms. Owning a solar panel system not only positively impacts your budget but also contributes to environmental well-being; there's no need for it to be a hassle during the refinancing phase.

If you're currently in the process of planning a refinance, rest assured, we'll work closely with you to ensure a smooth experience. For those considering the installation of solar panels and wondering about its impact on future refinancing eligibility, Lumio is here to guide you. We'll walk you through the entire process, addressing all your questions along the way. While refinancing with a solar lease or loan involves a few additional steps, a bit of preparation and foresight can simplify the entire process.

Empower your life by making solar energy a personal choice. Explore the value of solar by reaching out to Forme Solar today.