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.
While researching this topic, I found there are mortgage rules to keep in mind when investing in solar panels and alternative energy production.
The biggest question to remember when thinking about updating your home to a solar panel system: are the solar panels owned or is the equipment leased or being paid for under an agreement with the solar company?
If you own your solar equipment you will be able to sell your home 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.
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 it’s a good idea to know what you are dealing with out of the gate.