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Although competition is driving prices down, solar panel systems can require you departing with a chunk of change. Fortunately, the mortgage industry wants to talk to you.

Financing Residential Solar Power

If you are considering improving your home with a solar panel system or the hot new thin solar roofing systems, you need to learn three little letters – E…E…M. EEM stands for energy efficient mortgage. It also stands for avoiding out of pocket costs to improve your home with a solar.

Energy efficient mortgages came to be because of a nudge from the government to lenders in an effort to promote the use of solar energy as a power source. Put another way, the government told lenders to do it and do it now. So, what exactly is an energy efficient mortgage? Glad you asked.

An energy efficient mortgage is a loan that allows you to incorporate the cost of your solar improvements into your mortgage loan. The improvements can cost up to 15 percent of the total value of your home. The lender will calculate the energy savings for you home because of the new solar system and will add that to the total loan value, letting you borrow more than normal. Put another way, it doesn’t matter how much equity you currently have in your home, the solar financing is added on top of the loan. This, of course, lets you get a solar system without much out of pocket expense and you get to recover a good chunk of the cost through an increased mortgage interest deduction. Throw in tax credits, rebates and net metering incentives, and solar is getting mighty cheap if you know how to work the system.

Energy efficient mortgages have very few restrictions. You can get them for new construction or existing homes. The can be issued for single family residents, duplexes, condos and so on.

Frankly, it is a no brainer to go with an energy efficiency mortgage. Ask your lender for more information on the program so you can find out how to profit from a solar improvement to your home.

A brief layout of my solar system that I installed about 2 weeks ago.

At the start on 2009, the average household spends over $100 per month on their energy costs. The average car user also pays approximately $100 per month on gas. These energy costs will continue to rise as the price of crude oil shoots up again. However, it doesn’t need to be this way. If you could get your energy in a cheaper more environmentally friendly way, wouldn’t that make a nice change? “How can this work out cheaper?”, is probably your first thought when you looked at the price tag of home solar power systems. Some quick calculations involving solar power system costs reveal that they are much cheaper than first meets the eye.

What Are The Hidden Costs?
Solar power system costs are much less than what they first appear. A particular system make cost $20,000 or $30,000 but tax credits could make up anywhere from $7,500 to almost $15,000 for those systems, just the same as there are tax credits for electric and hybrid cars. A general guide is that tax credits will save you around one third of the solar power system cost, although exact savings could vary. It will take a few years to see the real savings of such a system and they are built up over time. Fortunately, the cost is all upfront.

Solar power system costs are not spread out over a period of time. You pay for the system, have it installed, and then you start racking the savings up. Systems like this generally pay for themselves in around 7-12 years. The size of the savings you will make will depend on the amount of energy your household consumes and the size of the home solar power system you install. Although they cost more, larger systems will save you more eventually. Should you happen to produce extra electricity, you could sell it back to the energy company and make some extra cash. If you install the solar power system yourself you would make even further savings as there would be no installation costs.

However, the solar power system costs also take into account the cost of fossil fuels on the environment. You need to bare in mind that by installing home solar power systems you will helping to reduce air pollution and the production of carbon dioxide. Saving hundreds or even thousands of dollars each year is a great incentive, but even more than this is the fact that you will be doing your part to protect the plant and become energy independent. Now is the time to act as many people are becoming increasing worried of our dependence on foreign oil and other energy sources. This is something every home owner can do something about.