More people can now go solar thanks to PACE financing
PACE is Property-Assessed Clean Energy financing
helps homeowners who lack perfect credit or an abundance of cash to go solar by assisting with the high upfront costs associated with energy-efficiency and renewable energy projects like:
How PACE works
Local governments pass laws to establish rules for PACE
To be an ideal candidate for PACE
There are several ways PACE financing can help if you’re thinking about going solar
The cost of your PACE loan is largely paid by the energy savings that begin with your solar upgrade when compared to your current electric bill. For example, California’s energy costs are super high, and a moderately-sized (5- kW) solar system there can save a homeowner upwards of $100 per month, while the loan payments will cost only about $60 monthly, saving you $40 a month immediately and for the next 25+ years.
Where can I get PACE financing for my home solar project?
Currently only California and Florida offer PACE financing statewide, but more states are getting on board. In these two states alone though, PACE programs have provided $2 billion in funding, paid for 97,000 home upgrades, and helped create 17,500 new jobs. For cities, St. Louis and Kansas City, Missouri are the places to be. The following table shows PACE lenders and the states and cities in which they are available:
Disadvantages of PACE financing
In all fairness, PACE financing has its challenges as well. To begin its only available in a very few places and its Interest rates are higher than traditional Home Equity Loans. PACE loans tend to be a little higher than other forms of equity credit. If you have good enough credit to get a HELOC, you can find one these days with a rate of 3-6, whereas PACE loans are often in the 6%-8.5%, with origination fees that drive the APR up to the 9%-10% range. But if you have good credit, you can do better.
More over because PACE loans are tax liens, by default they get paid back first in the event of a default on the mortgage. That makes most banks, especially banks that write FHA loans, unwilling to lend money for home mortgages with a PACE loan present. That can make it hard to sell or refinance your home if you have an outstanding balance on your PACE loan. One way around this problem is to ask your lender to “subordinate” your PACE loan, or reduce its payment priority in the event of a default. HERO and PACE Funding are the two lenders we know of who are willing to work with homeowners to subordinate the lien position of their PACE funds. So, choose wisely. Stay informed. And go solar with PACE financing.