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Todd Talbot
Tama Talbot Ortiz


Should I Buy a Home with Solar Panels?

The question isn't really should you, it's could you.  What I mean by this is almost all mortgage lending products will include the monthly solar lease payment amount in the borrowers income to debt ratio (DTI).  This isn't really fair considering the borrowers utility bills are reduced by over 90% and the banks do not include utilities in DTI ratios.  As an example, let's say a borrower was qualified for a $1,000 per month payment.  With today's interest rate and a minimum down payment, a borrower can afford approximately a $150,000 home.  If the solar lease amount was $150 monthly, loosing that $150 per month in qualifying power the seller would have to drop the price $31,000 to allow the same borrower to qualify for the same payment.  When it's your turn to sell do you want to be in this seller's position? 

If that isn't reason enough to buy a home with a solar panel lease, here are some others.  After the solar panel sales man came to my door, my wife and I did some research.  The salesman was very nice and told us our roof was perfect for solar.  Not surprising as we all live in Phoenix!  He also told my wife and I the contract was two pages and showed it to us.  He mentioned his contract was only two pages long several times.  We Googled information about that company's contract and any related discrepancies or disputes.  What we found was the contract unfolded several times, with new terms on the back pages in very small print.  It appeared as if these contract pages were tear-off carbon copies but they were actually additional terms.  Click Here to see the link I found of a video which explains a number of discrepancies from what I was told by the sales person that visited my house.

Finally, my personal opinion is that things are going to change significantly to benefit the consumer with regard to solar technology in the next 20 years.  As it stands right now, solar panel systems either do not have batteries to back-up the system when the sun isn't shining or the batteries will only energize a portion of a home for a limited time.  What this means is that if you own or lease solar panels, you still must be be connected to a power utility.  With that, your fate is still on the hands of regulators and authorities who control how much you pay and rate increases.  

Based on these mains points, I am strongly advising my clients to not purchase homes with solar panels, even if they can qualify for the home with the solar lease payment counting against their payment debt qualifying.          

To summarize:

  • Lenders are including solar lease payments against borrowers payment qualifying
  • This equates to borrowers loosing tens of thousands of dollars in purchasing power for homes with solar panels
  • Solar contracts can be very misleading often with hidden terms
  • With recent rapid advances in solar technology, locking into a 20 year contract doesn't make sense                 
  • I am advising clients against buying homes with solar panels

Location: Blog >> Should I Buy a Home with Solar Panels?

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