After much home-searching and soul-searching, the two of you have decided to say put in the home you’ve furnished, decorated, repaired, and remodeled over the past thirty-seven years. The next step, you’ve decided, is to install solar roofing, including charging stations for the electric vehicles you plan to purchase in the next year or so. Encouraged by several friends in your zip code who have gone this route, you have begun getting quotes from different solar installers. Although you plan to apply for Indiana’s energy savings incentive program, in addition to whatever federal incentives are available, you realize it will take quite a number of years to recover your up-front investment. At the same time, the monthly utility rates for your (all-electric) home have risen so dramatically, you’re determined to take back control.
How to best pay for the conversion is essentially a financial management dilemma, You could do the installation on a payment plan, refinance the home, or tap your retirement portfolios (most of which are in IRA rollover accounts, and you doubt this is an ideal time to take assets out of the market.
As an alternative to any of the three financial options you’ve mentioned, you might consider a reverse mortgage, using the equity you’ve built up in the home to finance the solar panel installation. Not only will you avoid market timing and the tax planning decisions relative to making withdrawals from rollover accounts, you’ll be able to take advantage of government and state incentives without the additional costs of an installment plan. whatever portion of your housing wealth is not needed for the project, will grow at the same rate as the interest being charged on the reverse mortgage loan.
Meanwhile, there will be no periodic payments due to the mortgage company; the loan will not need to repaid until such time as you sell the home, move, or die. In fact, neither you nor your heirs will be liable for any part of the loan that exceeds the value of the home at that time.
All that furnishing, decorating, repairing, and remodeling you’ve done over the past decades? Financing the solar conversion will allow you to reap the benefits in terms of energy cost savings.