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PACE Financing

What is PACE Financing?

P.A.C.E. Is an acronym for property assessed clean energy. PACE Is a unique type of financing, typically designed to encourage property owners to upgrade their home with energy or water saving upgrades such as solar power, energy efficient windows installation, cool roofing, attic insulation, High efficiency heating and air conditioning, as well as drought tolerant landscaping; anything that helps conserve gas , electricity, and watcher. PACE is different as you repay your financing alongside your property tax bill as a special line item. 


PACE background


PACE is local to Northern California with its roots in Berkeley. It began when a group of homeowners wanted to have their utility power lines placed underground. They had to petition the city to pay the upfront costs and the homeowners would then pay the loan through their property taxes over a number of years. It was determined that that concept could be applied to energy efficient upgrades that benefits  both the city, contractors, and homeowners.


in 2008, Governor Arnold Schwarzenegger (The Terminator), signed into law the specialty financing known as PACE. Today Commercial PACE legislation exist in roughly 35 states across the nation. Residential PACE is available in California, Missouri, and Florida. 


Who Benefits from PACE?


As mentioned above, PACE benefits city, contractors, and homeowners. Cities are under state and federal mandates to reduce energy consumption and greenhouse gases so having a program that promotes energy efficiency is of a huge benefit to the local municipalities. Contractors benefit because through the pace financing more homeowners are able to obtain financing and therefore contractors are able to do more work, hire an employee more local people and grow their business. Homeowners benefit because through this type of financing more below it is an easier type of financing to obtain, make their home more efficient energy, reduce their power and water bills and do their part for the environment. 


How is PACE Financing different from traditional financing?


PACE Financing is based on the equity in the home and the ability to repay. PACE is NOT based on FICO scores (no minimum FICO is required). Homeowners must have equity in their home, must be current on their mortgage with no more than ONE (1) 30-day late payment in the last 12 months, must be discharged from bankruptcy more than 2 years ago, and current on their property taxes. 


How is PACE Financing repaid?


PACE is repaid on your property tax bill as a separate line item. If you were to look at a property tax bill there are lying items such as mosquito abatement school bonds pothole repairs (although there are still billions of them on the road—sorry, I digressed); it is a line item that will stay on the property tax bill for the term of the loan. How you pay your property tax bill will not change, whether you pay it annually, semiannually, or through an impound account , that process will not change. 


Because pace loans are repaid alongside your property tax bill, your first property tax payment is usually in November, the second payment is usually in February. The closing date of PACE financing is generally the middle of June. if a property owner was to complete a project after June the first payment would not be until November of the following year nearly 18 months away before making the first payment. 


Are there Fees and Interest involved?


Yes, and Yes. There are origination fees , part of which goes to the local cities and counties cover as well as fixed competitive interest. There is also interest that accrues prior to making the first payment. 

What are the terms of PACE Financing?

Eligible products can be financed in terms of 5, 10, 15, 20, 25, and 30 years;  the maximum term will be based on the life expectancy of the project, typically 20-30 years.  Property owners doing multiple projects such as roofing windows HVAC , would be able to finance for the term that has the highest dollar amount.  

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Property Assessed Clean Energy Loan Providers

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Common Home Upgrade Projects

  • Solar power generation
  • Custom Windows and Doors 
  • Heating and Cooling HVAC 
  • Landscaping and turf 
  • Roofing and roof replacement

What are the PROs of PACE Financing?

  • NO FICO requirements
  • NO UPFRONT COSTS for doing project, and up to 18 months without payments
  • Fixed competitive rate
  • 100% financing up to $250,000 
  • Flexible repayment terms 
  • House could sell for more money with the added improvements and lower utility bills
  • Potential tax benefits 
  • Potentially transfers to new owners up on home sale 

What are the CONs of PACE Financing?

  • PACE Financing is Not available in all communities 
  • PACE becomes a lien (if you do not pay your property taxes)
  • It’s Complicated. 
  • Overall increase in your property tax bill—this does NOT increase the actual property tax bill, just the overall bill as it is added.
  • The interest rate might be higher than you can get with traditional home equity lines of credit HELOC’s.
  • The PACE loan might not transfer applying the sale of the home 

We Are Here To Help

Let us help you determine the best financing plan for your energy-saving home improvement. We are here to help and are certified experts in PACE financing programs from all the current providers.