A number of homeowners have chosen to get solar on their homes in Southern Nevada, with the choice of leasing versus purchasing them. Solar power is great and whether to buy or lease the panels depends on the needs of the individual. However, if you plan on selling your home in the near future here are some things to consider about solar leases pertaining to the ability for the potential buyer to obtain financing on your home:
Lenders could require to request an exception because of the solar and there is the minimum documentation/debt calculation requirements. Additional requirements may be required by the specific investor.
1. The solar company will place a lien on title most of the time. This lien MUST be subordinated to the new financing obtained by the buyer to purchase the home.
2. A copy of the lease documentation will need to be provided to the buyer’s lender and must show that the lease is transferable.
3. The lease payments must be considered as debt when calculating the buyer’s debt to income ratio (this may put the buyer over the allowable debt to income ratio for qualifying in some cases).
4. The appraisal must include comparables with solar panels (This can be a difficult task for the appraiser to find a home in the area that recently sold with panels. Some lenders will require more than one comp with similar features)
As you can see a solar lease on your home will require you and the buyer to jump through some extra hoops to obtain the necessary financing to complete your transaction. When considering solar panels homeowners should consider how long they plan to stay in the home. Of course circumstances change but if your planning on selling your home with solar leased panels, it could be a hinderance and limit your buyer pool. FHA’s solar lease requirements are far less clear but a letter from your solar company certifying that they meet all CFR 24-203.41 requirements will go a long way in helping your house sell with FHA financing if you have leased panels.
Contact us for more information.