Don’t Let Solar Interfere with Mortgage Financing

Don’t you hate it when you go to purchase a new home with solar equipment installed, only to find out that there is a solar equipment lien on the title report that is preventing you from getting mortgage financing?  What now? solar-panels

First, review the agreement between the current owner and the solar equipment provider.  Chances are that the solar equipment is removable, does not constitute a lien against the property and the agreement is transferable to you.   In that case, whether you are obtaining a conforming loan or a “jumbo” loan, the mortgage loan should be unaffected.

Ah, but what if the solar equipment WAS installed as a fixture and a lien is valid against the property?  In that case, there are effectively two options:

  1. Ask the solar equipment provider to subordinate their lien to the mortgage so that the mortgage is in first position or
  2. Negotiate with the seller to pay off the lien in escrow

Another, future solution would be to have municipalities form public/private partnerships with solar-financing companies to provide solar financing to homeowners.  Here are some potential benefits of simply having a line item for solar on the utility bill and paying the financing company through the city:Solar_panels_on_house_roof

  1. It could serve as an additional revenue source for the city, since the city acts as the Servicer
  2. Payments would logically transfer to each successive owner until the financing is paid off, making the payments fair for each owner
  3. There would be no issues with liens against the property potentially affecting mortgage financing
  4. More property owners would likely adopt solar energy going forward under this structure

By all means, if you have the time and energy to implement the potential solution above, please proceed!

If you have any questions about the various mortgage financing options available, please contact your favorite mortgage advisor.