Solar power projects tend to be somewhat expensive. If your seeking electricity, hot water, etc all that equipment will really add up depending on your needs. So before even deciding specifically what type of solar power system is needed for your home it’s a good idea to see what sources of financing are available.
Even if you possess the cash to fund a solar home project it’s still a good idea to finance the equipment and installation for the simple fact that interest rates are low and that money can be invested elsewhere for a better return. Finance options include a mortgage, consumer loan, or supplier loan. Consumer loans generally have higher interest rate. This includes credit cards and finance company loans with interests rates from 12 to 24 percent. For most people the credit card option is out of the question.
Sometimes the company selling you the solar power equipment will offer financing using the equipment as collateral. These interest rates tend to be lower at 6 to 10 percent. Homeowners building new homes or retrofitting an older house with solar equipment usually receive the best rates, because on default the lender can collect against the value of the house, not just the solar equipment. Mortgage rates typically run around 6 to 9 percent for fixed-rate, before any rebates. Another advantage to mortgages is that interest rates are deductible against your federal as well as state income taxes in many cases.
If you already have a mortgage or loan its a good idea to contact your lenders to get more information. If buying a new home the costs of solar planning and equipment can be included in the cost of your first mortgage. If you possess a first mortgage, refinancing for a larger amount to cover the new expenses or applying for a second mortgage if the interest on your first is lower than you could get by refinancing. Just make sure the loan fees are accounted for into the cost of any new loans. If you do go with a mortgage you’ll most likely get a loan through a traditional lender such as a bank or savings and loan.
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