Solar is a significant investment. If you’re doing research on a site called “solar financing,” you probably don’t have $20,000 to $40,000 in cash just lying around. Fortunately, you own a house. This gives you access to several types of relatively low interest loans that, if you have your heart set on buying a system rather than a solar service, can help you achieve that dream.
A second mortgage is a type of secured loan, which means you are using your home as colateral. However, it’s a “second mortgage” because, if the loan goes into default, your original mortgage gets paid off first.
This means that, from the bank’s perspective, second mortgages are riskier than first mortgages but safer than an unsecured loan, and so the interest rate is set accordingly – higher than your first mortgage and lower than an unsecured loan would be. The downside is: if you can’t pay both your original mortgage and your second mortgage, the bank can take your house.
If you’d like to see to see how large a second mortgage you would qualify for, there are mortgage calculators online.
Energy Efficient Mortgages
Energy efficient mortgages take the home’s energy efficiency into account when calculating the homeowner’s debt-to-income ration. This makes it easier to qualify for a loan, or get a larger loan.
Generally, to qualify for an EEM, the borrower must get an energy rater to conduct an energy rating before the financing is approved. EEMs are usually for people trying to buy a house that already has energy efficient features, but can also be used to make those home improvements.
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