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Under Biden's "Rebuild Better" plan, the cost of installing solar panel systems at home may become cheaper. Consider your solar loan options and see if long-term savings are worth it. (iStock)
The House of Representatives passed President Joe Biden’s signature spending plan to "rebuild better," and the White House called it "the greatest effort in American history to address climate change." Part of this effort is investment in green energy sources such as electric vehicles and residential solar panels.
The current framework of the bill will reduce the cost of installing rooftop solar panels by approximately 30% through a new and improved tax rebate program and increased federal tax credits. The White House estimates that this will make it easier for homeowners to obtain solar energy and save the average American family hundreds of dollars in electricity bills each year.
Nevertheless, the installation of solar panels may bring a lot of upfront costs. Read on to learn more about how to pay for solar panels, including home equity financing and unsecured loans. Visit Credible to compare interest rates on various financial products, including cash mortgage refinancing and unsecured personal loans.
BUILD Back BETTER provides an incentive of US$12,500 for electric vehicles made in the United States and expands the electric vehicle tax credit
According to data from the Department of Consumer Affairs, according to the current federal tax incentives, the average cost of installing solar panels in the United States is about $12,000. Biden's "Rebuild Better Act" will significantly reduce these upfront costs in the form of increased tax credits. But remember, Build Back Better still needs to pass the Senate, and the Senate may amend it before it can be signed into law.
There are several factors that affect the final cost of installing solar panels in your home, including your power needs, the type of panel you choose, where you live, and the size of your home. According to estimates by the Department of Consumer Affairs, the cost of a small solar panel unit may be as low as US$5,000, while the cost of a more advanced residential solar system may be as high as US$40,000.
Here are some popular solar panel financing options to choose from:
Read more about each type of home improvement loan in the following sections.
Refinancing the FHA loan? Here is everything you need to know
Mortgage refinancing means that you purchase a new mortgage loan on better terms to repay your current home loan. Refinancing can help you lower your monthly repayment, pay off your mortgage faster, and even get the home equity.
Cash out refinancing allows you to obtain a mortgage with a value higher than the current value of your house, so you can get the difference in one lump sum. According to Freddie Mac, since mortgage interest rates are still relatively low, it is possible to use your home equity without increasing the monthly mortgage payment.
In addition, you can also deduct interest from your tax withdrawal refinancing. The Internal Revenue Service (IRS) allows homeowners to apply for tax incentives for home renovations that significantly increase the value of the home, such as clean energy improvements.
Keep in mind that mortgage refinancing has some disadvantages. According to Credible, you must pay the transfer fee, which is usually between 2-5% of the loan amount. In addition, if your new loan is below the 20% down payment threshold, you may need to pay for Private Mortgage Insurance (PMI).
Visit Credible to compare mortgage refinancing rates without affecting your credit score. Then, calculate your new monthly payment to determine whether this option is right for you.
Fannie Mae Executive: Three Reasons Homeowners Should Refinance
Home Equity Loan and Home Equity Line of Credit (HELOC), also known as second mortgage, are your financing options in addition to your current home loan. Unlike the mortgage refinancing, you will keep the original mortgage terms and get a new loan with your own monthly payment method.
Compared with cash refinancing, the main advantage of home equity loans and HELOC is that you may not need to pay transfer fees. Some home equity lenders will pay transfer fees, while refinancing mortgage loans will not.
However, interest rates on home equity loans and HELOCs are usually higher than those on mortgage refinancing, which may make them more expensive financing options.
You can browse the current mortgage refinancing rates in the table below.
Personal loans VS. Credit card — when to use each
A personal loan is an unsecured loan that allows you to borrow a lump sum of cash without using your house as collateral, which means that if you default on the loan, you will not risk losing your head. This relatively low risk makes personal loans a popular choice for homeowners who need capital to finance their home renovations.
Compared with guarantee options such as home equity loans and mortgage refinancing, personal loans have slightly higher interest rates because if the borrower defaults on the loan, there is no collateral to seize. Instead, the lender determines the personal loan interest rate and eligibility based on the borrower’s creditworthiness. Consumers with good credit will be eligible for the lowest possible rate.
Fortunately, according to data from the Federal Reserve, personal loan interest rates are close to historical lows. This makes it a good time to apply for personal loans to pay for home renovations such as solar panels.
If you decide to take a personal loan to finance the installation of solar panels, it is important to compare the interest rates of multiple lenders to ensure that you get the lowest interest rate that suits your situation. Visit Credible to view personal loan offers and repayment conditions for free.
Personal loan origination costs: are they worth it?
Have financial-related questions, but don't know who to ask? Send an email to moneyexpert@credible.com to send an email to a trusted financial expert. The trusted financial expert may answer your questions in our financial expert column.
Quotes are displayed in real time or delayed for at least 15 minutes. Market data provided by Factset. Supported and implemented by FactSet Digital Solutions. Legal Notices. Mutual funds and ETF data are provided by Refinitiv Lipper.
Do not publish, disseminate, adapt or redistribute this material. ©2021 FOX News Network Co., Ltd. all rights reserved. Frequently Asked Questions-New Privacy Policy