How Much Do Solar Panels Cost?
How much do solar panels cost? Not as much as they used to. So spending the multiple thousands out of pocket for a whole solar system on your roof is a real possibility, if you have the cash.
But if you don’t want to lay out that kind of scratch, consider the choices. All the different options can overwhelm you, the average homeowner. But we can help you navigate that sticky wicket of loans, re-fi cash-outs and solar lease agents knocking on your door.
While solar might seem like a big investment now, the savings in energy costs over the long haul could be incredibly significant.
One quick and easy way to start researching how much you can save is by using Google’s Project Sunroof. The database allows you to put your address in and automatically estimates how much you could save over a 20-year period with solar panels. It also allows you to tweak the estimate by providing current utility information.
Now, how are you going to pay for it?
Leasing Your Solar Dreams
Leasing solar panels from Solar City or Vivint or one their dozens of competitors can be a viable option. It may not seem like that, since the door-to-door agents that prowl your neighborhood can be as pushy as cable salesmen.
Generally, there are almost no upfront costs and the installation and maintenance of a solar panel system is covered by the installer. And they have a vested interest in making sure that the system meets the output goals they promised. If you are not getting the energy output you agreed to, the company pays the difference.
With any financial decision this important, you need to weigh the pros and the cons. When you lease, the savings might not as great as when you buy outright, it is the quickest way to get panels on your roof. Another check in the pro column is locking in an electric bill that will not rise for the next two decades. Very helpful when utility rates tend to rise 4-5% per year.
On the con side, you need to read the lease agreement carefully and make sure that you are protected in case you look to sell your home after installing leased solar panels. Consider this scenario: you have a buyer for the home, but they balk at signing a transfer agreement to take over responsibility for the solar lease. You might be on the hook for a buyout to get out of the solar lease. Or, some buyers, without a taste for solar systems on their roof, will end up walking away when seeing what they have to take on with a solar lease.
On the con side, since the leasing and installation of solar panels is such a new practice, some banks will not be sophisticated enough to understand how the systems work and how to factor them into an appraisal. This could hurt the market for buyers if and when you decide to sell.
Another pro is, you can likely add on an option to buy at the end of the term. And the installer is completely in charge of maintenance and upkeep. Heck, they will even come out and take the panels off if your roof needs to be repaired or replaced.
Home Equity Loans
If interest rates have gone up it makes sense to explore a second mortgage (home equity loan) option. Otherwise, if you can reduce your current interest rate while getting a few bucks out to add some solar panels, it might make sense to consider a cash-out refinance, in order pay for the solar panels flat out and reduce your main mortgage interest rate.
For the cash-out refinance option to make sense, you want to make sure that the new mortgage and lower utility bills add up to a considerable monthly savings. If the numbers work, you have the added bonus of tax-deductible interest.
Build It Into Your Mortgage
Fannie Mae offers a program that might make sense, instead of a cash-out refinance. The HomeStyle Energy Mortgage can allow buyers to finance a solar panel installation onto their roof while in the process of buying a new home or refinancing their current home. Current homeowners can also use the program to pay off existing home equity debt used to pay for solar installation.
Solar panels can be the ticket to a significantly reduced power bill. Even if you don’t have the cash to pay for them outright it can make sense to finance the installation or lease them from a third party. The long-term savings should make it one of the savviest money moves you can make.
Not So Fast…
One of the most frustrating things about the solar roof decision is the feeling that a major breakthrough is just around the corner. Tesla founder Elon Musk just recently teased the launch of solar roof tiles that looks just like shingles or slate or tile roofs that are in style now, but have the same functionality as solar panels. Now Musk is very bullish on this new technology and claims it will cost just as much as a regular roof, when you factor in the energy savings, but it pays to be skeptical.
Just keep up with the research as much as you can. And know that the next big thing could be around the corner…or 30 years away.