Wintrust Advisor – Solar Panels Are Everywhere

Solar Panels Are Everywhere. How do they impact mortgage financing?

It’s April and in honor of Earth Day we are going to have an environmental focus on our next few installments!

I was out and about last week and in just few blocks sighted 6 homes in our neighborhood with solar panels. As the daughter of an early environmentalist, seeing so many houses with solar power supplementation excited me. As a mortgage professional I wondered how having solar power might impact the mortgage qualification process.

According to www.CostofSolar.com, updating your home to solar panels as your home’s energy source can save a homeowner on average $20,000 over the course of 20 years. “Residents in some states with high electricity prices can expect to save much more than that – consider Hawaii, where residents save on average $64,000 after 20 years.”

While further researching this topic, I found there are mortgage rules surrounding solar panels to keep in mind when investing in alternative energy production.

The biggest question to remember when thinking about updating your home to a solar panel system: does the homeowner own the solar panels or is the equipment leased or being paid for under an agreement with the solar company?

If you own your solar equipment you should be fine to sell your home later at any time. Complications can arise when you do not own the equipment. I would suggest that if you consider installing solar power, have a lender review the contract to determine if there could be any issues with future financing. Leasing solar panels can make an impact should you decide to sell your home at a later date.

Complications that can arise with leased solar equipment:
• The solar panels may not be included in the appraised value of the property
• The buyer may have to qualify with the solar lease payment included in their ratio
• Traditional electrical services to the house must be maintained and functional
• There are insurance requirements, and other issues to address that make financing a property with leased solar equipment more challenging

Agents, if you are listing a property with solar power, call me early on to determine any possible complications to a future buyer. Some solar providers have created contracts and lease agreements that are suitable to lending requirements, but you want to know what you are dealing with out of the gate. Here is an article on this subject from the LA Times that you might find interesting.
http://www.latimes.com/business/realestate/la-fi-harney-20150322-story.html?track=rss
On another note:
Realtors in this busy spring market if you have a favorite loan originator who you think would enjoy the Wintrust platform, send them our way!

Amy Tierce
Regional Vice President
We’re here to help you and your buyers do more, learn more and grow more!

Wintrust Mortgage is a division of Barrington Bank & Trust Company, N.A., a Wintrust Community Bank NMLS# 449042. Copyright © 2015 Wintrust Mortgage KO15031397

 

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Do you know all the different programs available with little or no money down?

Conventional 97% – (That’s 3% down) Fannie Mae has reinstated their 3% down loan program. One of the borrowers must be a first time homebuyer, which means that they cannot have had ownership interest in a home in the past 3 years. All of the down payment can be a gift from a family member!

My Community Mortgage – Like the Conventional 97 program, this Fannie Mae product is for lower income buyers and offers reduced mortgage insurance costs. Borrowers must complete a homebuyer education class. Income limits are established by county that must be adhered to.

FHA Loans – Allows buyers to get into a home with a 3.5% down payment, which can be in the form of a gift from a family member. FHA makes allowances for lower credit scores and higher ratios.

VA Loans – This is a first class zero down payment loan program. Wintrust waives our processing and underwriting fees for our veterans. The seller can contribute up to 4% as a credit towards closing costs and we can offer a lender credit to minimize closing costs as well. Always be sure to ask your prospects if they have served in the military.

USDA Loans – Yes, the US Department of Agriculture has a home loan division that allows 100% financing. The property must be in a rural zone and the borrower’s income must be within the USA income limits. Give us a call if you want to learn more about USDA qualified communities in your area.

State Bond Programs – Most states offer a housing program of some type that allows for zero or low down payment and other benefits for the state’s low to moderate income residents. For example, Massachusetts offers the Mass Housing programs, which has income limitations and is available to first time buyers only (defined as not having ownership in a piece of real estate in the past three years) and requires that the buyer attend a home buying education class.

Each of these programs offers different benefits and advantages depending upon the profile of the homebuyer. Let your mortgage professionals at Wintrust Mortgage navigate this maze with your buyers. We will provide complete education as to appropriate offerings and provide written comparisons on all programs. Homebuyers will be better equipped to make an educated decision on how to structure their new home purchase in a way that meets their needs and dreams!


Amy Tierce
Regional Vice President

We’re here to help you and your buyers do more, learn more and grow more!

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