The Notorious P.A.C.E.
The P.AC.E. program has gotten a terrible reputation due to "scammy" contractors trying to hustle vulnerable homeowners, usually the elderly or immigrants. The program is somewhat confusing and that gives leeway to bad intention contractors to take advantage of there homeowners. I personally believe that the program is a great way to finance a home improvement project, but it is not ideal for everyone and there are various things that one most keep in mind when making that decision.
P.A.C.E. stands for property assessed clean energy, the program allow's a property owner to finance the up-front cost of energy or other eligible improvements on a property and then pay the costs back over time usually between 10-30 years. The loan is secured by the property itself and paid as an addition to the owners' property tax bills. There is interest added onto the loan, depending on the lender that you are using, and the term of the loan, but typically you can expect in the range of 4.99%-8.49%.
Where it gets tricky is in the details of how the loan is paid. A lien is recorded for the value of the improvements and is then payed through the property taxes. If you pay taxes yearly then the total of 12 months worth of payments will be added to your property taxes. For example if your monthly payments were $100 and you pay taxes once a year you will see an increase of $1,200 added to your property taxes. The lien recorded is a superior lien, which means that it is the debt that will be paid off first. This can be a problem if you try to sell the house before the debt is paid off, some mortgage lenders do not take on homes with a superior lien or some buyers don't like the idea of the added payments, this is not an end all be all everything can be negotiated but it is something to be aware of. Another con is that your home is at risk of foreclosure if you don't make the required payments on the PACE loan, even if you pay your mortgage on time, due to it being the superior lien.
In conclusion, I believe the PACE program is a benefit to homeowners and contractor's alike. It gives homeowners option's in terms of managing they're cash flow. If the property is going to be a permanent home or if you see staying there for a long amount of time and you believe you can afford the payments, then I'd recommend the PACE program to you. For more info on financing Impact windows give our office a call at 305-55-0229 we offer different financing option other than the pace program.