Michael Beckham CDPE, SFR, CNE

More home owners may be able to use solar panels to curb electricity bills without paying any upfront costs for installation.

While home owners have shown a desire for “green” power, they may not be able to afford the $35,000 investment.

That’s why a company in San Mateo, Calif., called SolarCity, as well as other solar companies, are introducing a new lease option to get more customers signed on to use solar but without the huge upfront costs. With the lease option, customers have the option of paying either nothing upfront with higher monthly usage fees or more initially and less monthly.

"You have full flexibility in what you want to pay on a monthly basis," says SolarCity CEO Lyndon Rive. Rive says that home owners are only charged for the electricity the solar panels generate at or below market rates. If the solar panels produce more electricity than they need, the home owner earns a credit.

In California and Colorado, leases have grown, accounting for a third of the residential solar market in the first quarter of the year, according to the Solar Energy Industries Association. The overall solar panel market has seen a big growth in recent years: Expanding at an average annual rate of 69 percent since 2000 and by 100 percent last year alone.

A recent study has shown that solar panels can actually boost a home’s resale value too. Home owners were found to not only be likely to recoup their initial investment from the installation of panels but even tend to make more at resale.

On average, solar panels added about $5.50 per watt to a home’s resale value. In other words, a home with a typical 3.1-kilowatt solar system stands to make an extra $17,000 above the cost of a comparable, nonsolar home, according to the study by Lawrence Berkeley National Laboratory.

Source: “More U.S. Homes go Solar With no Upfront Costs; All Owners Pay for Is the Power They Use,” USA Today (June 14, 2011) and REALTOR® Magazine online

The House Financial Services Committee has sought out to improve the financial standings for the Federal Housing Administration (FHA). Is this a good thing or a bad thing? Lets dig deeper, to sum up the proposed bill its main point would be to raise the down payment from the current 3.5% to 5% so that the borrowers have more "skin in the game" and become less likely to default. There has been a lot of arguement on this topic as the smaller down payment is not the only factor that has been found common among mortgage defaults. A group known as The Cato Group who is a group devoted to limiting government participation in free markets is in agreement with the House Financial Services Committee. In oposition to the bill Real Estate Industry advocates such as National Association of Realtors (NAR) and the Mortgage Bankers Association (MBA) feel that a higher down payment will disqualify a lot of credit worthy borrowers and have a negative impact on housing recovery.

My take on this is that as long as we have consistent underwriting standards like we have currently and given the high priced rental market that maintaining the 3.5% down payment will put many borrowers in a better financial position than before. Remember that buying is actually cheaper than renting in this market and if you are thinking about financing with an FHA loan I would advise not gambling as rates are at a 200 day low and the down payment is really affordable.