If you plan on selling your home, should you get a HERO or PACE loan to make energy-efficient upgrades? I’ll explain today.
Looking to sell a home in Southern California?
Looking to buy a home in Southern California?
HERO and PACE loans are being touted as great opportunities for homeowners to make energy-efficient upgrades to their home. While that may be the case, there are a few things you want to be aware of if you plan on selling your home and you have one of these types of loans.
Now, the important thing is that these are basically loans against your home. A lot of the salespeople for these loans say, “It’s not a big deal, it’s just a little extra payment that gets rolled up against your property.” You may have six months to a year before you have to pay them back, but eventually, they do need to be repaid.
If you are going to sell your home, that cost is going to come out of your existing equity.
I had a couple of clients recently who sold homes and they did solar panels and a new paint job on the home. Now, those loans against the property have to be repaid. The salespeople will tell you that it can be transferred to the new homeowner, and that is possible.
However, think about it like this—if you were going to remodel your home and get a home equity line of credit or a cash-out refinance to upgrade your kitchen, the new buyer wouldn’t take over those payments. They would just buy the home at the value you chose because the home increased in value. They’re not going to take over the payments on the mortgage. They will get their own new mortgage and have their own payments based on their situation.
If you plan on holding the property long-term, then a HERO or PACE loan is a good option for you.
So, it’s not likely that someone will take over the payments for that HERO or PACE loan. If you are selling the property, expect that you have to pay that off as part of the property.
If you do want to look at these programs and you’re planning on holding onto the property, those loans may be a great way to make some energy-efficient upgrades, like adding solar panels or insulation. Things like that will update your home and allow you to enjoy some energy savings.
However, you may not want to do those upgrades if you are going to sell your home in the near future. You may want to plan to pay cash for them. If you are going to hold the property long-term or keep it as a long-term rental, then there’s no problem with using the HERO or PACE loan to pay for those upgrades.
If you have any other questions, just give me a call or send me an email. I would be happy to help you!
