Posted by: Luca Brammer | Posted on: March 29th, 2011 | 1 Comments
Consumers from all walks of life come to Hallmark-Southwest for answers on how to build their very own version of a perfect home. More and more frequently, consumers of ours and consumers around the globe are looking for a means of financing sustainable energy solutions when buying a home. This is especially true for people that want to live off the grid. To be clear, by living off the grid, I mean not connecting your home to a local power company at minimum. At maximum, this can include not hooking your home up to a city or county sewer system or any other public utility of any kind.
The specific question this article tries to answer is more focused on how to finance solar photovoltaic systems in to manufactured homes specifically, focusing on the unique conditions that many people that want to live off the grid face.
The first challenge some people face that want to live off the grid is that they plan to live in areas where utilities are not present in the first place. This may sound redundant, but it’s important for one reason: in many of these areas, appraisers have a difficult time estimating the value of a property since they are in remote or rural locales. This is not to say that an appraiser cannot determine value by extending the area of comparable sales beyond the traditional appraisal process. It is to say, however, that when values are determined based on non-traditional, yet perfectly legal and ethical means, home loan underwriters tend to use a more careful eye when signing off on the estimated value of a property. So, let’s assume that a solar photovoltaic system costs a consumer $30,000.00 as a line item in construction costs. The estimated value of the home, according to an appraiser is $350,000.000, yet the total amount of the loan requested is $280,000.00 meaning, the buyer is willing to bring a 20% down payment. Now assume the lender disagrees with the estimated value as the property, in their estimation, is not as valuable as other homes that are 10-15 miles away, the nearest comparable sales. In fact, the lender will only give the home an estimated value of $325,000.00 and still wants a 20% down payment. This means the maximum loan amount is now $260,000.00, $20,000.00 less than what the buyer was planning on. To make the deal work, the buyer can either (a) bring more money to the closing table to cover the shortfall or (b) exclude their much desired solar photovoltaic system or (c) find financing for the solar PV system after closing escrow.
These are some of the troubles experienced not only by people that live in rural or remote areas, but also by buyers that live in traditional areas as well due largely to increased scrutiny in the loan underwriting process and declining property values. So, it’s not necessarily that people who want to live off the grid are getting treated unfairly, it’s more like a perfect financial storm has caused many of these problems.
So what are some available solutions? First, and most obviously, put more money down during the escrow process. Second, acquire the solar photovoltaic system after escrow has closed through a completely different process and determine if your manufactured home builder maintains financing for solar photovoltaic systems or can direct you to a source. Often times, the companies that work with solar PV systems can point you in the right direction easily.