Adding Solar Panels to Upcoming House Purchase

[ScoGold]

Multi part question here.

I’m purchasing a home and will close in 45 days. Since we are dropping a lot of money on the down payment, is it possible to roll the cost to install solar into the mortgage? I am not sure how that would work because we would need the mortgage to start before we got the invoice for the solar install but curious if this makes sense to anyone else.

Also since we will not move in until August, does is that enough time for Tesla Solar to get their ducks in a row so we can have it installed prior to January 1 when the tax incentive decreases? I have heard of long wait times in previous years, but curious what wait time people are seeing for 2020 purchases/installs.

I talked to my Tesla Advisor and he said to put down the $100 deposit ASAP but that is probably just him doing his job to get orders.

 

[boaterva]

Not sure how you can get this done when you don’t physically own the home until you close on it. I’m sure they look things up and you won’t be shown as the owner yet. As you say, you might want to have everything set, and push the button the day after closing and see how it goes.

It may be possible to have Tesla get a pre-approval from the electrical company for the design (and amount of production) if that’s needed where you are, mine took months and was the major holdup. But we also needed a year of electrical bills to show what we used so that we would not be ‘over producing ‘. Guess that’s not an issue?

Anyone ever done this for a property without history?

 

[Collier007]

That Is a really good question for your loan officer, as every institution and underwriter has their own rules. My guess is not directly, but you could put less money towards the down payment (as long as your still above 20%) and use the cash for the solar install. Also, how long is your mortgage? I personally don’t think it makes sense to pay for an asset over 30 years that is designed to only last 10-15. Finally, you can always get a HELOC from your bank once the mortgage has closed and draw on the HELOC for the solar installation. It’s usually at a variable rate, but those are pretty darn low right now and can be paid off at any time (such as when you get the tax credit).

Install times are going to vary by region and depends on the approval of local authorities and municipalities. My guess is that 6 months should be plenty of time....

 

[jjrandorin]

Multi part question here.

I’m purchasing a home and will close in 45 days. Since we are dropping a lot of money on the down payment, is it possible to roll the cost to install solar into the mortgage? I am not sure how that would work because we would need the mortgage to start before we got the invoice for the solar install but curious if this makes sense to anyone else.

Also since we will not move in until August, does is that enough time for Tesla Solar to get their ducks in a row so we can have it installed prior to January 1 when the tax incentive decreases? I have heard of long wait times in previous years, but curious what wait time people are seeing for 2020 purchases/installs.

I talked to my Tesla Advisor and he said to put down the $100 deposit ASAP but that is probably just him doing his job to get orders.

I am not in the mortgage industry so just a person on the net, but it sounds like you are buying the home from someone instead of buildiung your own? If so, trying to roll that into the mortgage at inception would also likely cause the lender to need to have the home appraised again, to see if the loan makes sense to them with the new value with the solar on it. The lender might agree to it if the LTV still makes sense, but would add quite a bit of complexity to your transaction.

it would open up a can of worms you dont want open. Much (much much) better to simply put less money down, and pay for the solar out of some of that down payment, which basically accomplishes much of the same thing, provided you still qualify for the loan and interest rate with the lower down payment.

In order to make it by the end of the year, you would want to have everything ready to "press go" basically the day you close. No idea how solar installs go in places where there is actual winter (with snow) unlike here in southern california.

Y

 

[BrettS]

Typically a bank will not do any cash out on a purchase mortgage because there is no equity for it. The selling price of the house will be at or close to market value for the house and your mortgage amount plus your down payment will be equal to the selling price. As someone earlier said, you can give them less of a down payment and save that money for solar, but keep in mind that if you put less than 20% of the house value down you will likely need to pay PMI which could be as much as $100 a month(or more) depending on the amount of the loan. If you’re OK with the PMI then a lot of banks will go as high as 97% loan to value or maybe even as much as 100% loan to value, so you don’t need to put any cash down, but I don’t think anyone will loan you more than the house is worth and have you start upside down on your mortgage.

You say that you’re going to move in in August, but you’re going to close in 45 days. The actual move in date is less important than the closing date. If you close in July, for example, you could still have Tesla start the permit and install process as soon as you own the house, even if you haven’t moved into it yet. However, you won’t be able to get too far along in the process until you have actually closed on the house. You do need to be present on install day, so if you are moving across the country that might be a little difficult if you haven’t actually moved yet, but you might be able to delay the actual install until you are actually in or near the house.

In my case, after I put down my deposit it took Tesla only a day or two to come up with the initial drawings showing panel placement. Once I approved those it took another couple of weeks before they got to the point where they were ready to apply for the permit. My city requires signed and sealed engineering drawings for permits and I think some of the delay there was waiting for those drawings to be completed, signed and sealed. Different cities have different requirements.

At this point the process would have to stop until you actually own the house since they won’t be able to get a permit until you have closed and the house is in your name. The other thing to consider is that you probably don’t want to apply for any solar loans before you have closed on your mortgage. It is possible that additional inquiries or loans appearing on your credit report before you close on the mortgage could cause your closing to be delayed or potentially even cause your mortgage to fall through at the last minute.

If you want this process to move as quickly as possible, what I would do is the following:

Go ahead and place your order and put down your $100 deposit. Let them come up with the drawings and approve the drawings. After that they will ask if you are paying cash or going with a loan. If you tell them that you are paying cash you might be able to change your mind and go with a loan later, so maybe ask if that’s a possibility, but as I said above, I wouldn’t apply for the loan until after you have closed on your house.

So the process will likely be put on pause at this point as the next step will be to get the permits and that can’t be done until you have closed and actually own the house. Once you do close you can apply for the loan and Tesla can go ahead and pull the permits. At closing ask the closer for a copy of the warranty deed. You won’t show up in the public records as the owner of the house for around 30 days after closing, so that could cause confusion when they apply for the permit. If they provide a copy of the warranty deed at the time they apply for the permit that should allow it to go through.

The permitting process may take a few weeks, then once the permit has been obtained they will call you to schedule the install. If you can arrange to be at the house on install day, even if you haven’t moved in yet, then go ahead and schedule it to happen as soon as possible. (In my case they called me the day after the permit was approved and scheduled the install 19 days out). If you aren’t going to be near the
house until you move in, then schedule the install day for a couple of days after move in day.

They don’t want other contractors working on the house on the same day as install day and I assume that would include movers, even if you are moving on your own. They wouldn’t want people underfoot walking in and out of the house all day with furniture and boxes while they are trying to do the install, so don’t schedule the install on move in day.

But I think that’s probably the way you’ll be able to get it installed as quickly as possible

 

[pdx_m3s]

If you’re already putting more than 20% down, just divert some of your down payment to solar. The math works out the same. You’re effectively financing the panels that way.

 

[ScoGold]

Typically a bank will not do any cash out on a purchase mortgage because there is no equity for it. The selling price of the house will be at or close to market value for the house and your mortgage amount plus your down payment will be equal to the selling price. As someone earlier said, you can give them less of a down payment and save that money for solar, but keep in mind that if you put less than 20% of the house value down you will likely need to pay PMI which could be as much as $100 a month(or more) depending on the amount of the loan. If you’re OK with the PMI then a lot of banks will go as high as 97% loan to value or maybe even as much as 100% loan to value, so you don’t need to put any cash down, but I don’t think anyone will loan you more than the house is worth and have you start upside down on your mortgage.

You say that you’re going to move in in August, but you’re going to close in 45 days. The actual move in date is less important than the closing date. If you close in July, for example, you could still have Tesla start the permit and install process as soon as you own the house, even if you haven’t moved into it yet. However, you won’t be able to get too far along in the process until you have actually closed on the house. You do need to be present on install day, so if you are moving across the country that might be a little difficult if you haven’t actually moved yet, but you might be able to delay the actual install until you are actually in or near the house.

In my case, after I put down my deposit it took Tesla only a day or two to come up with the initial drawings showing panel placement. Once I approved those it took another couple of weeks before they got to the point where they were ready to apply for the permit. My city requires signed and sealed engineering drawings for permits and I think some of the delay there was waiting for those drawings to be completed, signed and sealed. Different cities have different requirements.

At this point the process would have to stop until you actually own the house since they won’t be able to get a permit until you have closed and the house is in your name. The other thing to consider is that you probably don’t want to apply for any solar loans before you have closed on your mortgage. It is possible that additional inquiries or loans appearing on your credit report before you close on the mortgage could cause your closing to be delayed or potentially even cause your mortgage to fall through at the last minute.

If you want this process to move as quickly as possible, what I would do is the following:

Go ahead and place your order and put down your $100 deposit. Let them come up with the drawings and approve the drawings. After that they will ask if you are paying cash or going with a loan. If you tell them that you are paying cash you might be able to change your mind and go with a loan later, so maybe ask if that’s a possibility, but as I said above, I wouldn’t apply for the loan until after you have closed on your house.

So the process will likely be put on pause at this point as the next step will be to get the permits and that can’t be done until you have closed and actually own the house. Once you do close you can apply for the loan and Tesla can go ahead and pull the permits. At closing ask the closer for a copy of the warranty deed. You won’t show up in the public records as the owner of the house for around 30 days after closing, so that could cause confusion when they apply for the permit. If they provide a copy of the warranty deed at the time they apply for the permit that should allow it to go through.

The permitting process may take a few weeks, then once the permit has been obtained they will call you to schedule the install. If you can arrange to be at the house on install day, even if you haven’t moved in yet, then go ahead and schedule it to happen as soon as possible. (In my case they called me the day after the permit was approved and scheduled the install 19 days out). If you aren’t going to be near the
house until you move in, then schedule the install day for a couple of days after move in day.

They don’t want other contractors working on the house on the same day as install day and I assume that would include movers, even if you are moving on your own. They wouldn’t want people underfoot walking in and out of the house all day with furniture and boxes while they are trying to do the install, so don’t schedule the install on move in day.

But I think that’s probably the way you’ll be able to get it installed as quickly as possible

Thanks for the feedback on this everyone. I put down the $100 and the HOA Project Coordinator reached out to me to confirm the roof and location of the utility meter. They started drawing everything up but cannot move to the next step until I close on the house and I am the owner.

I was shocked when I spec-ed things out, it was only $60 more to add 2 PowerWalls due to all of the incentives. I am waiting to hear back from Tesla when they spec things out whetther or not that is accurate.

 

[getakey]

Not sure how you can get this done when you don’t physically own the home until you close on it. I’m sure they look things up and you won’t be shown as the owner yet. As you say, you might want to have everything set, and push the button the day after closing and see how it goes.

It may be possible to have Tesla get a pre-approval from the electrical company for the design (and amount of production) if that’s needed where you are, mine took months and was the major holdup. But we also needed a year of electrical bills to show what we used so that we would not be ‘over producing ‘. Guess that’s not an issue?

Anyone ever done this for a property without history?

I added Solar 2 months after purchasing home. Had no electricity history. Worked with installer to estimate. I have an Engineering background which helped and they had good modelling software. I'm on PG&E net metering and my first annual true-up bill was $50. We nailed it.

 

[pdx_m3s]

I added Solar 2 months after purchasing home. Had no electricity history. Worked with installer to estimate. I have an Engineering background which helped and they had good modelling software. I'm on PG&E net metering and my first annual true-up bill was $50. We nailed it.

That's great. We close on a new construction home in 2 months that will be fitted with a 10.4kW array. Based on my calcs, we should be at net zero, but there are so many unknowns coming from an older natural gas heated house to fully electric heat pump system (HVAC and water heater).

For those curious, Tesla Energy has a dedicated team for new construction. I've been really happy with their customer service. I believe their new construction program offers a lot more flexibility compared to their retrofit business. I did not need to upload any previous bills, we just estimated based on sq. footage, appliances, heating/cooling, and owning a Model 3.

 

[ScoGold]

I added Solar 2 months after purchasing home. Had no electricity history. Worked with installer to estimate. I have an Engineering background which helped and they had good modelling software. I'm on PG&E net metering and my first annual true-up bill was $50. We nailed it.

I understand you want to be as close as possible to not over product but it’s unclear why. If you have net metering, then why would it matter if you over produce if you’re just paying it back to the grid?

 

[pdx_m3s]

I understand you want to be as close as possible to not over product but it’s unclear why. If you have net metering, then why would it matter if you over produce if you’re just paying it back to the grid?

Depends on the utility. I believe the here in Portland (Portland General Electric), they'll never actually cut you a check. If you're in a net credit position at the end of the year (spring time), they donate you're credit to low income families to offset their bills. Fine by me.

 

[BrettS]

I understand you want to be as close as possible to not over product but it’s unclear why. If you have net metering, then why would it matter if you over produce if you’re just paying it back to the grid?

I think it depends on the utility company. In my case I have net metering, so I get 1:1 credit for any power I put into the grid. However, when they do the true up at the end of the year they will only pay me the wholesale price for anything that I overproduce. That‘s just a few cents per kWh, so there’s really no payback for buying a bigger system.

 

[getakey]

yes - thats how PG&E does it. If the net annual true-up bill is negative, that just vanishes. You could have net negative costt without over producing, meaning you still had a net usage from the grid. However, if you do over produce, they pay you ~.03/kWh