THINGS YOU SHOULD KNOW ABOUT PARTICIPATING IN THE RESIDENTIAL PACE (PROPERTY ASSESSED CLEAN ENERGY) PROGRAM
What is the Residential PACE program?
PACE or Property Assessed Clean Energy Program is a government sponsored program that is used in Florida to finance energy efficiency improvements, renewable energy improvements and wind resistance improvements.
Is the PACE program free for me?
The PACE Program is not free. To participate in the program you must qualify for a loan for the improvements. The loan that you owe is then added to your property tax assessment, increasing your property taxes each year until the loan is paid off.
How do I qualify for the loan?
The law requires that to qualify you must have paid all your property taxes and not have been delinquent for the last 3 years, that there are no involuntary liens on your home and no notices of default and that you are current on your mortgage. The PACE Program is not required to look at whether your family budget can afford the additional loan.
How do I pay the loan?
The PACE Program loan is paid with your property tax assessment. If you have a mortgage, your lender probably includes the property taxes in your monthly payment. If so, your monthly mortgage payment will increase accordingly.
Do I pay interest for the loan?
In most cases, PACE Program loans charge interest, usually between 6% and 9% per year, over 20 years, which in many cases may be higher than other loan financing. You should ask about any low interest loans available, like utility sponsored programs, federal weatherization programs or a lower rate loan at your bank or credit union with a second mortgage or a home equity line of credit.
Are there other costs?
PACE Program loans also charge borrowers points and fees of at least 5% and an annual administration fee of approximately $35 for the life of the loan (usually 20 years).
What happens if I am not happy with the improvements?
A licensed contractor must do all PACE Program improvements. However, your recourse against the contractor if you are not happy with the improvements may be limited by the nature of the PACE Program financing. That is why it is important to carefully select the contractor and read all paperwork carefully.
For energy improvements, does the contractor have to give me an energy audit?
The law does not require any verification of energy savings for improvements to your home from a PACE Program loan. Any figures about energy savings given to you by a contractor would need to be independently verified by you.
What happens if I have trouble making the increased tax payment?
If you default on your PACE Program loan by failing to pay your property taxes notice, a tax certificate will be sold on the property. After two years of an unpaid tax certificate, your home could be sold through the Tax Deed Application process.
Can I refinance my home while I still am making payments on my PACE Program Loan?
PACE Program loans may impede your ability to refinance your home loan or to receive a home loan modification because some lenders will not want to enter into new loan terms while a PACE Program loan is assessed against your home.
Can I sell my home before I have paid off the PACE Program loan?
The PACE Program loan can be transferred to the buyer when you sell your home. BUT Fannie Mae, Freddie Mac, the Federal Housing Administration and the Department of Veterans Affairs will not insure mortgages with PACE loans. Other lenders are not required to accept PACE Program loans.
What is the most important thing I can do to protect myself?
Take your time before you sign. Ask for and read any documentation relating to a PACE Program loan. Make sure you ask for a printed copy and don’t sign anything that seems too complex or confusing.
MAKE SURE YOU ASK FOR A PRINTED COPY OF ALL DOCUMENTS TO READ BEFORE YOU ALLOW ANYONE TO WORK ON YOUR HOME.