Are you considering making energy improvements to your home? You aren’t alone. As a matter of fact, there is a government program that helps you do just that. It’s called the PACE or Property Assessed Clean Energy program.
The program provides borrowers with the money to make clean energy changes to their home. Homeowners then pay the money back through their property taxes.
Just how does this work and is it worth it? Keep reading to find out more.
The PACE Program Defined
The PACE program provides 100% financing to homeowners that want to make clean energy changes to their home. The loan then becomes a lien on the property, much like a mortgage would do. You must use the funding provided to make energy efficient changes to your home. A few examples include the installation of solar panels and installing energy efficient HVAC systems.
The money originates from the government or a bank, depending on the funding available in your area. The term of the loan ranges from five to 20 years, depending on the amount you borrow. You pay interest on the funds. The loan remains tied to the property rather than the homeowners, which would make it difficult to sell the home until the loan is paid off or if the homeowners pay the loan off with the proceeds of selling the home.
So what can you do with the proceeds of the PACE Loan? The following are a few common examples:
- New energy efficient HVAC system – If you have an energy efficient HVAC system, you may use less energy in your home. You will also have less wear and tear on your furnace and A/C unit, which can save you money in the long run. The cost to install new HVAC systems can be costly, but the benefits often outweigh the costs.
- Lighting – Energy efficient lighting can save a lot of energy in your home. LED lights are safer, use less energy, and cost less over the life of the light because they last a lot longer than traditional light bulbs.
- Insulation – If you have areas in your home that aren’t insulated, it’s like opening the window and letting the hot or cold air out of your home. With proper insulation in areas, such as the attic or basement, you can keep the hot or cold air in your home without issue.
- New windows – If you have older windows, chances are that they are not energy efficient. This can cause hot and cold air to leak out of your home. This can cause immense wear and tear on your HVAC system as well as cost you a lot of money on your gas and electric bills. New windows can solve this problem, helping you to save energy and money in the long run.
- Solar panels – If you have solar panels installed correctly, they can greatly reduce your energy bills including your lighting, heating, and air. They are expensive to install, but they often pay off in the long run.
Applying for a PACE Loan
You can apply for a PACE Loan if your state participates in the program. You can determine if they do here. Once you know that they do, you can find a lender that will process your loan. From there, you will apply for the loan as you would any other loan.
You must prove that you have the income, assets, and credit to qualify for the loan. The lender will need to know the value of your home, the cost of the improvements you plan to make, and the effect they will have on your home.
Paying the PACE Loan
Just like your property taxes, you’ll pay your PACE loan twice a year with your taxes. You continue to do this until the loan is paid in full or when you leave the home. If you sell the home, the proceeds of the sale will pay off the loan first.
The PACE loan can help you make changes to your home that you otherwise would not be able to afford. It’s a great way to save energy and make an impact on the environment without breaking the bank.Click to See the Latest Mortgage Rates»