If you have been looking for ways to finance your next home improvement project here in California or Florida, you may have come across Property Assessed Clean Energy (PACE) financing. The benefits of PACE include no required upfront or out of pocket costs, low fixed interest rates, and built-in consumer protections.
Through PACE, you can finance 100% of the cost of your qualifying home improvements and upgrades through a voluntary property tax assessment (not a loan), where the financed amount is attached as a lien on the property—not to you, the borrower. Once the financed amount is paid back in full, the lien is removed.
As you consider PACE financing to make your home more efficient, comfortable, and resilient, you may be wondering: What are the interest rates I can expect through PACE?
PACE Interest Rates
Just like other financing options available in the market, PACE financing also has interest rates and fees associated with it. These interest rates, closing costs, and fees will always vary by provider, as well as the home improvement contractor selected to complete the PACE approved project.
Some contractors may have the ability to offer lower fixed interest rates than others. This is based on their relationship with the PACE provider, like Renew Financial, and can be dependent on the volume of PACE eligible projects that the contractor can provide.
With PACE from Renew Financial, interest rates range from 3.69% to 8.49%. Compared to a credit card, interest rates are variable ranging from 13% up to 27%.
The best way to know what interest rate you can expect to pay for your PACE financed project? Getting a customized no-obligation quote over the phone, with one of our Renew Financial PACE experts.
Other Fees Included in PACE
Interest rates are not the only consideration when it comes to choosing the right financing option. Homeowners must also take closing costs into account. These fees can be paid upfront if you are in a financial position to do so, or they can be rolled into the financed amount. In the case of the latter option, the interest rate will apply to those closing costs over time as well. Common PACE financing closing costs include (but are not limited to):
Financing Fees
These are one-time fees that are incurred at the time of funding to cover the setup costs associated with a PACE financed project.
Prepaid Interest
Depending on when the contracting work and funds of your PACE financed project occur, you may not see the balance of your financing until the following year’s tax statement. The prepaid interest is the amount of interest that is added to the financed amount for the period prior to the first tax year in which payment is made. This is similar to other financing options like a mortgage, where the amount of interest between the funding date and the first day of payment is built into the total financed amount.
Annual Administrative Fee
In order to cover the annual costs of placing a PACE assessment on your property tax rolls and managing the tax payments, there is a yearly administrative fee with some PACE financed projects. This fee can vary slightly over the financing term.
