Recently, we did an article on the various financing options for replacement windows and doors, but since that time, we have been informed by several sources that one of the options mentioned in the article has a serious downside, so we wanted to do a follow-up article to make sure that San Diego homeowners are aware of it.
The HERO program, which is a financing option through the government’s PACE financing program, allows homeowners to get new windows with no money down and pay for them over time along with their property taxes. This has been an attractive option for many homeowners who didn’t have the cash on hand for new windows. However, there is a potential drawback to the HERO program that is not always disclosed to homeowners applying for this type of financing.
Many homeowners are told that when they obtain financing through the HERO program for any energy-efficient upgrade to their home, the financing stays with the property, meaning, if they sell, the new homeowner will take over the payments. This is true in some circumstances, but not all. In reality, HERO financing creates a tax lien on your home, and some mortgage companies such as Fannie Mae and Freddie Mac have refused to underwrite loans for properties with PACE-based liens. This requires the loan to be paid off in its entirety at the time of a sale. In other cases, homeowners have had difficulty refinancing their homes when there is a PACE-based lien attached to the property.
Michal Bohm, owner of San Diego replacement window company BM Windows, said, “We know many replacement window companies in San Diego offer financing through the HERO program because it allows homeowners to purchase replacement windows who otherwise may not be able to afford them, or who may not qualify for a traditional loan. We used to offer this type of financing as well, but recently decided to stop. There were just too many problems with the HERO program for both our customers and our business.”
Bohm continued, “Our company has decided to switch to offering zero-down financing of replacement windows through EnerBank. Homeowners are often approved for a loan over the phone in a matter of minutes, and EnerBank pays the replacement window contractor directly, which makes it easy and efficient for everyone involved. Other San Diego replacement companies use different financing programs, but we’ve had a good experience working with EnerBank and recommend them to any customer looking for a good financing option.”
The HERO program has served many San Diego homeowners well since its inception, but as with any decision involving your home and your money, be cautious and ask lots of question before proceeding with this type of financing.