President Obama has announced the Clean Energy Savings for All Americans Initiative, following through on commitments made at the White House’s 2015 National Clean Energy Summit. This highly anticipated initiative will help support energy efficiency improvements and deployment of renewable energy for homeowners across the United States.
A key component of this initiative is a set of guidelines issued by the Federal Housing Administration (FHA). These guidelines will establish steps for homes with Property Assessed Clean Energy (PACE) financing assessments to be purchased and refinanced with FHA-insured mortgages. By resolving the longstanding uncertainty surrounding the transactions for homes that have taken advantage of PACE, both lenders and homeowners can rest assured that PACE financing costs will remain low and be more accessible than ever.
At a time when renewable energy has never been more affordable, according to Fortune, paving the way for PACE-financed properties to be a regular fixture in the home lending industry will enable more Americans to take advantage of the booming clean energy economy and save on their energy bills.
PACE financing provides homeowners with a way to implement energy efficiency and renewable energy improvements, such as a new air conditioning system, new windows, insulation or potentially even solar panels. PACE loans fund the up-front cost of improvements and are repaid annually as an addition to the owners' property tax bills, typically over a 10- to 20-year assessment term.
Earlier this year, a report finding that PACE upgrades net higher resale values compared to homes without PACE upgrades made waves. This report also found PACE projects recovered at least 100 percent of their costs, a much higher return on investment than typical home renovations such as bathroom and kitchen remodels that only recovered 58–66 percent of their full costs at the time of sale.
Find out if your state has residential PACE and what programs may be available.