Just when you’re trying to save money by upgrading your home to clean energy, the greedy scammers sell you on an overpriced, junk-fee PACE loan.
PACE stands for Property Assessed Clean Energy. The loans are for homeowners to get energy efficient upgrades and to do disaster readiness. They are paid back through your property taxes. Red flag right there!
You don’t want a loan rolled into your property taxes! Keep your loans separate from your taxes. But there’s more.
The PACE loan is not your best option. You can get financing from your bank or credit union for cheaper than PACE (for most borrowers).
The PACE loan is usually about 5 percentage points higher than your first mortgage, which doesn’t make sense, because in the event of default, the PACE loan gets their money before the first mortgage lender does. Hence, it is not a riskier loan and should not carry a higher interest rate.
In addition, lenders can add extra nonsense fees to the loan — and have been found to do so.
PACE loans are marketed to homeowners, often by door-to-door sales people. They don’t always point out the superfluous fees nor do they mention that their rates are higher than what you can get elsewhere. They try to persuade you that rolling the payment into your taxes will be “seamless and easy,” never mentioning that raising your taxes puts your home in greater danger of being foreclosed on by the County.
Always shop and compare loans before you sign anything. Especially when it comes to something as important as your home!
