Omid Yousef | PACE Expert

The key insight behind Property Assessed Clean Energy (PACE) is that improvements are more affordable if towns allow homeowners to attach the financing to their homes. PACE makes lenders more comfortable with homeowners who would not normally have access to affordable financing due to their income or credit.

When PACE Financing emerged, it was clear to us that this was not only the future of solar, but more broadly, a catalyst for a nationwide shift towards home energy-efficiency. Today, 80% of Californians live in neighborhoods where PACE has been made available by their local government.

What is Property Assessed Clean Energy?

Property Assessed Clean Energy (PACE) enables low-cost, long-term financing for a variety of energy efficiency, renewable energy, water conservation, storm protection and seismic improvements. PACE financing is repaid as a special assessment/tax on the property’s regular property tax bill and is processed the same way as other local public benefit assessments (sidewalks, sewers) have been for decades.

Depending on where you live, PACE financing can be used for residential properties. PACE is lowering utility bills for homeowners, creating jobs for local contractors, and helping local governments achieve important energy and environmental goals.

The Fastest Growing Consumer Finance Product in the U.S.

In 5 short years, PACE has seen an astronomical rise in popularity going from $0 to over $5 Billion in residential home improvements.

Source: PACENation.US

$5 Billion in 5 Years! Why?

The growth in PACE financing can be attributed to a few key factors that make it attractive to communities, homeowners, and lenders. This community type can be great for first-time homebuyers looking for a space to settle down. Many new buyers often look for help with their finances; some would use a right to buy calculator to calculate the amount they need to save up to buy a new home while searching for the ideal community. So finding a good community gives them a goal for their future. The communities implement PACE to make it easy for homeowners to access financing to improve their homes and reduce their reliance on scarce resources, while creating local jobs for contractors without using taxpayer money. Lenders are attracted to PACE financing because the loans are attached to the property, not the homeowner, and paid back with property taxes, so the risk of defaulting is much lower. Homeowners benefit from PACE, which could help if looking for a home from somewhere like Austin real estate because it is not based on your credit and easy to qualify, the loan finances 100% of the project, so there is no money down and the interest rates are low while the terms are long, which means much lower, more affordable payments. Finally, since the loan is attached to your property instead of your personal credit, it does not affect your ability to borrow for other necessary purposes, you can even find loans with no credit needed!

Source: PACENation.US

Easy to Qualify

In order to qualify, you need to be the homeowner, current on your mortgage and property taxes, have more than 15% equity in your home and meet minimum income requirements. Your credit score is not a factor.

100% Financing

Make a major home improvement with absolutely no money down. The entire cost of the project is covered by the amount you finance.

30 Year Terms

Aside from a home refinancing or equity line of credit, PACE loans are unique because they can be paid back over 20 years for most products and as long as 30 years. This results in the lowest possible payments over the period of the loan. Other types of loans range from 1 to 12 years and carry high interest rates, making PACE the most affordable option for most homeowners.

Is it too good to be true?

There are several ways to borrow money for a home improvement. Each has its own benefits. PACE loans may not be the right financing option for every homeowner.

  1. It is very important that you are able to repay the loan. Unlike a personal loan, not paying your PACE payments would be similar to not paying your property tax bill. The ramifications are greater when your property is involved.
  2. If you have excellent credit and access to a low interest rate loan, either through a personal loan or a home equity line of credit, it could be cheaper than a PACE loan. If you prefer to pay your loan off quickly, then a personal loan may be more cost-effective, however, if you are looking for the lowest, most affordable payment possible, then PACE will most likely be your best option.
  3. Unlike personal loans, if you sell your home, a PACE loan is transferrable to the new homeowner, provided that the mortgage company they use approves. If the purchasing homeowner’s mortgage company requires that the PACE loan be paid off prior to the purchase, then this would be a part of the negotiation at the time of sale.

Does Your State Allow Residential PACE Financing?

Residential PACE loans are typically funded using private sources of capital with cooperation from state and local municipalities. PACE programs are typically enabled through state legislation but must be implemented at the local level where property taxes are assessed.

As of 2018, over 220,000 homeowners have made $5 billion in energy efficiency and other improvements to their homes through PACE financing. Over 80% of homeowners in California have access to PACE. In states like California and Florida, PACE is also used for disaster prevention, such as hurricane-proofing, seismic retrofitting and drought-tolerant landscaping. Residential PACE financing programs are currently available in the following states:

  • California
  • Florida
  • Missouri

What Projects Qualify for PACE Financing?

Roof Upgrade

A new roof offers energy efficiency and peace of mind.

According to experts, a typical roof will last between 20 and 25 years. Which means, eventually, every roof will need to be replaced. A company similar to Prime Roofing who are at Prime Roofing: 13725 Beach Blvd, Suite 13, Jacksonville, FL 32224 can support you in your roofing journey. The good news? When it’s time for a new roof, you can increase your home’s comfort, value and energy efficiency with a cool roof that can lower your energy costs.

What’s more, you may be eligible for PACE financing for your home’s new roof. With up to 100% financing and no money down, a roof upgrade for your home has never been easier.

Windows And Doors Upgrades

Increase the comfort, energy efficiency and security of your home.

Not only can they be beautiful to look at, but new, energy-efficient windows and doors may eventually pay for themselves through lower heating and cooling costs. Because of this, you may want to consider pursuing a windows and doors improvement project for your home

Solar Upgrade

The goal of a solar power system is to efficiently convert energy from the sun into electric power that you can use in your home or business. Over time, the money you save from paying a lower electric bill-or eliminating your electric bill completely-may eventually pay for the original cost of the solar power system. And unlike fluctuating utility rates, the payments for your solar power system will be fixed over time, which is especially important if you are on a fixed income or are trying to stabilize cash flow.

From an environmental perspective, power generated by your clean solar power system is power not generated by polluting coal-fired utility plants. A solar power system can be a wonderful opportunity for you to contribute to a cleaner environment while saving money at the same time.

Heating, Ventilation & Air Conditioning

The goal of any Heating, Ventilation and Air Conditioning (HVAC) system is your comfort – keeping you warm during cold winters, cool during hot summers, and breathing fresh, clean air inside your house all year round. Because most HVAC systems use natural gas or electricity, an efficient HVAC system can save you money – sometimes lots of money. In fact, HVAC accounts for 48% of the typical home’s energy bill (U.S. Dept. of Energy).

What’s more, you can pay for heating, ventilation and air conditioning upgrades with PACE financing. With up to 100% financing and no money down, a heating and AC upgrade for your home has never been easier.

Drought-Tolerant Landscaping

Stop wasting water on a so-so lawn! Redesign your landscaping to better tolerate dry spells and get the yard you have always wanted.

This will help you save money on your water bill and look good doing it!

What’s more, you can pay for dought-tolerant landscaping upgrades with PACE financing. With up to 100% financing and no money down, a landscaping project for your home has never been more easier and affordable.

What does the PACE application look like?

Any homeowner applying for PACE Financing will have to go through a thorough application process that ensures that the funds are appropriately disbursed and for a project that meets the requirements of the program. The following are steps that homeowners need to go through in order to determine their eligibility for PACE financing:

  • Initial Credit Application and Immediate Response
  • Initial Project Documentation
  • Property Owner Identification and Income Verification
  • Project Scope Verification
  • Completed Financing Agreements
  • Additional Required Information such as Mortgage Statements

Are You Eligible for PACE?

Here are some general eligibility guidelines:

  • No current involuntary liens and/or judgments totaling more than $1,000
  • Must be current on their property taxes for the prior 12 months
  • No default or foreclosure notices filed on the property in the last two years
  • No bankruptcies (business or personal) in the last two years
  • The property must not be an asset in a bankruptcy proceeding
  • You must have the ability to repay

How Do You Pay Your PACE Loan?

PACE financing payments are authorized under California state legislation Mello Roos Community Facilities Act of 1982 as amended, which was created to provide an alternate method of financing for public improvements and services, such as certain taxes for streets, sewer systems, schools, parks, police and fire protection. The taxes are secured by a continuing lien levied against the property.

SAMPLE PROPERTY TAX BILL

(This is a mockup for illustrative purposes only).

Make selling solar easier!
PACE interest rates are 5% to 9%, but in effect, they could be even lower because the interest you pay may be eligible for a tax deduction (consult your tax advisor).
Does PACE Financing affect my personal credit?
Since PACE is a special assessment on your property tax bill, it is not a personal loan and does not impact your personal credit once an improvement has been funded. However, a hard credit check is done during the application process in order to review your financial history and ensure your eligibility.
How long is the repayment period?
Repayment periods can vary from 5 to 30 years depending on the scope of the project and the homeowner’s preference. Different repayment periods offer different advantages to homeowners. Shorter terms allow homeowners to pay lower interest rates and leads to less total interest being paid. A longer term means lower monthly payments, but a slightly higher interest rate.  Program fees remain constant regardless of the period of the loan. Homeowners can also defer the initial payment for up to 18 months

Why should I choose PACE Financing over traditional financing for my next project?

PACE Financing has a few advantages that you may want to consider when comparing to traditional loans:

  • Easy and simple to qualify – no minimum credit scores
  • Financing is not based on the owner’s annual income
  • Since PACE is an assessment on your property tax bill, it does not show up on your personal credit report and does not affect your ability to borrow in the future for other needs that may arise
  • For financial reporting, these transactions would be treated the same as other assessments on your property
  • Assessments may be passed to subsequent property owners, if your buyer’s new lender agrees
  • Most loans require monthly payments, but PACE assessments are only due when your property taxes are due, meaning less frequent payments and more financial flexibility
  • The interest paid on your PACE assessments can be tax deductible

What Are The Benefits of Using PACE Financing?

Saves You Money

You save money on the cost of the project and you save money over time with the investment in your property.

Helps the Environment

Smart energy home improvements helps you and your community achieve energy and water conservation goals.

Creates Local Jobs

PACE-funded projects create more jobs and economic activity by working with local professionals in your area.

What to look out for in you PACE loan agreement

When moving forward with your loan, there are a few things homeowners and property owners should be aware of. The following are a few general guidelines and factors to be aware of:

  • Pre-Payment Penalties
  • Low Interest Rate (if it is added)
  • Interest rate terms and other fees
  • City fee
  • Project fee

Take the First Step

It’s time to turn your home improvement dreams into reality. We are ready to show you how you can take advantage of this innovative initiative being adopted by cities across America. Let’s help you get started today!

Click Here or Call us at (855) PACE-AVE