pay off morgage or get solar panels, what's most economical?

oil pan 4 · February 2012

Re: pay off morgage or get solar panels, what's most economical?

I say kill your mortgage.
I heard once that mortgage is a greek that means life time debt.

vtmaps · February 2012

Re: pay off morgage or get solar panels, what's most economical?

RCinFLA wrote:

Focus on improvements and conservation. 26500 kwh/yr is 72.6 kWH avg per day. That is one hell of a lot of electric useage.

I just read through this entire thread. Only one member of the forum (RCinFLA) mentioned the first rule of energy production: conservation. This entire thread and all the calculations would be quite different if you include the ROI of conservation. --vtMaps

raydias · February 2012

Re: pay off morgage or get solar panels, what's most economical?

Couple of questions to clarify the decision tree.

How much is owed on the mortgage?

Are you looking to pay it off now, meaning in one payment or accelerating your 30yr to a 15, 10, 7 etc? Figure out how much you would be paying in electric bills over the remain term of the loan VS. having solar. Compare that to how much you pay in interest.
Example:
Mortgage interest:
20 years left on the loan - $15,000 * 20y = $300,000
5 years left on the loan - $15,000* 5 = $75,000

Electric bill
20 years left on the loan - $2,819 * 20y = $56,380
5 years left on the loan - $2819 * 5 = $14,095

Lots of factors to this decision but in most cases paying of the loan makes the most sense. More cash flow, better security and flexibility (can sell a house with no mortgage far easier than one with. based on how much you would need to sell the house for to satisfy the loan without having to short sell and screw your credit).

If you have a very short pay off period:
From what we have I would agree that paying off the mortgage is the the best path. You get more cash flow which would allow you to save the funds needed to the solar installation. You could also pay off the current mortgage, get a new mortgage with a very short term (a low interest rate 2nd) for the solar installation. This would give you the tax benefit if that's what your looking for. Personally I would just save for the solar, max out the 401k contributions.

If you have many years to pay off the current mortgage:
Refinance to a shorter term loan (15 or 10 year) at a much lower rate. Your payment will probably be close to what you pay now. If you have cash to install solar do so and use the saving from a lower or no electric bill to accelerate the mortgage payment further.

As was mentioned your current consumption should be looked at to gain savings. use some of the cash to insulate, replace old appliances, get more efficient heating and air etc. Much better ROI on energy efficiency.

my 2 cents

BB. · February 2012

Re: pay off morgage or get solar panels, what's most economical?

Just remember this thread is approaching 1 year old... Probably let Rolland E. have a chance to respond if he has any more questions.

-Bill

rollandelliott · February 2012

Re: pay off morgage or get solar panels, what's most economical?

Thanks, I would up getting solar panels. for my situation I think it was around the same ROI than paying off mortgage, maybe a little worse, but I love solar. I admit my emotions won over my logic.

BilljustBill · February 2012

Re: pay off morgage or get solar panels, what's most economical?

rollandelliott wrote: »

Thanks, I would up getting solar panels. for my situation I think it was around the same ROI than paying off mortgage, maybe a little worse, but I love solar. I admit my emotions won over my logic.

Even if you "Want" to go solar, maybe you should think about starting small, while paying down your Mortgage as fast as you can....

If the future holds to the dollar losing value, what will happen to your ability to pay on your Fed. and local taxes, mortgage, and "living costs"? Also, please remember that, as "Life" will do, you may face some health or medical issues that might make "Paydays" smaller as well as handing you big deductible even if you have great insurance... All those "Sudden costs", and especially The Mortage Debt will not devalue when/if the dollar does.

I've been collecting all my Outback equipment and panels when on sale, building the ground mounts, and all the while, paying for all the costs of my 3.5-4.5KW battery powered solar project for the last 20 months. I'm using profits of "My Part" of our garage sales profits, and also sending in garage sale silver and gold jewelry into a refinery that I've found at pennies-to-quarters on the dollar.... Even collecting scrap Copper ($3lb), brass ($1.70lb.) and extruded aluminum at (.58-.71-cents lb.) has been sold to help pay for the coming expense of a trenching machine and a certified Electrician's review and stamp of approval...

I've gotten a lot of help from members on this forum, and especially one, SawMill. Telling it straight and true, with experience, facts, and humor, it's helped so much. In view of our uncertain economic times, I'm just doing the same thing by sharing what I'm doing and how it has come this far by playing it "Safe".

May the best of luck be with you and your solar project,
Bill

pay off morgage or get solar panels, what's most economical?

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