21 Oct #45-What are PACE Loans and why be concerned?
#45-What are PACE Loans and why be concerned?
PACE stands for Property Assessed Clean Energy. It is a state program allowing for financing of energy efficient improvements to properties as a special assessment on the property tax bill and creates a lien on the property. These loans will increase the amount paid on the tax bills paid in November and April. If you pay into an escrow account, this will also increase your monthly payments.
These loans are administered by third parties and can take up to two tax bill cycles to appear so being prepared is imperative. Tax bills require full payments at due date. If these tax bills/loans are not paid on time, a 10% penalty, if not paid by second tax installment, another 10% plus $10.00 fee will be charged! If not paid by June 30th, the property will go into default and an extra 18% penalty will be charged per year!
When selling your home, two things could occur. You may have to pay the full loan off, or the loan may be transferred to the buyer IF they are willing and able to afford it. This is a material fact that should be disclosed as soon as you consider selling so it is addressed at the very beginning so all parties are properly prepared.
If you are buying a property, you will want to be certain you understand the costs, the repayment terms, and the balance of years and amount owed. Your lender will need this upfront and there may be additional paperwork required by the company who holds the PACE loan requiring extra time.
Long and short of it is be VERY CERTAIN this is really something to undertake and know all the facts!
Call if you have any questions! I have many tools to assist you in determining if this is something you wish to pursue!
OiC Real Estate Services Inc.