The Not So Sunny Side of Solar Panels

Have you recently been approached by a sales agent for solar panels? Many solar specialists are unaware that there’s a potential correlation between solar panels and your home’s existing mortgage. You’ll want to make sure you’re fully informed before signing a contract with a solar panel sales representative.

The Cost

Solar panels can be extremely appealing to homeowners looking to lower their electricity costs and go greener. While solar panels are meant to save you money over time, there is still an initial or long-term cost associated with them depending on if you purchase, lease or finance them.

According to HomeGuide, the average 6-12 kw solar panel system costs between $10,000 and $30,000 and is typically paid back in 7 to 12 years, while leasing them costs around $100 per month. The average family uses 11,000 kw per year and can need anywhere from 26-33 solar panels to power the whole house, depending on the home’s location and roof size.

If you buy or finance your solar panels, the 2005 Energy Policy Act provides tax incentives that can reduce the total installation cost. Leasing does not provide a tax break, but it can be more cost effective in reducing your energy costs because the initial fees are lower than buying. Solar panels are durable and can last many years with general wear and tear. Most companies offer an extended warranty option on their systems. The location of your home can impact the system’s lifespan.

The Savings

The primary attraction to installing solar panels is lowering energy costs in your home. So how much can you save? Solar panels have proven to be approximately 30% cheaper than utility-based electricity and on average you can expect to save anywhere from $600 - $2,000 per year, according to HomeGuide.

The Effect on Mortgages

The idea that solar panels can save you money over time is great, but how can they affect your home’s mortgage and resale value?

Buying a Home with Solar Panels

If the current homeowner owns and has paid for the panels, then they can choose to take the solar panels or sell them with the home. It’s important to check the condition of the solar panels. If they’re older, you may want to factor in the cost of replacing them when deciding whether to buy.

Selling a Home with Solar Panels

If the solar panels are paid for, many sellers will include them in the sale because the addition can increase the home’s resale value. 

If the seller is leasing the panels, they’ll need to find out if they can transfer the lease to the buyer. Some lenders may not allow loans for properties under any type of lease, or will have stricter guidelines, so it’s important to speak with a lender directly about how leased solar panels could impact you. If the lease is transferred to the buyer, their lender will factor those costs into what they can afford. 

If the seller is financing the panels, it’s even trickier. A lien is put on the home when solar panels are acquired with a loan. Most lenders will not finance a home with an existing lien, so the solar panels must be paid off before a loan can be secured.  

If you're thinking about getting solar panels, you should evaluate how that decision might impact future home sales or purchases. Speak with a lender directly to learn more!

This is not legal advice.

< Go Back