With electricity rates rising dramatically in response to accelerating oil and natural gas prices, seniors can use reverse mortgages to save on their electric bill and stabilize their household budget. Volatile electricity bills can blow the top off the average senior’s fixed income budget. Southern California Edison, the largest electricity provider in California, has requested a 25-30% price increase this year alone. By installing a solar panel system utilizing photovoltaic technology, a homeowner’s electricity bill can be greatly reduced or eliminated altogether.
With a reverse mortgage, seniors can generate much needed cash while reserving the right to remain in their home until they die without having to make any payments to the bank. Many seniors qualify for reverse mortgages of between $200K and $300K.
“If a senior qualifies for a $250K line of credit via a reverse mortgage, that individual could take an estimated 10% of the amount and purchase a solar system for his home,” said Scott Gordon, Director of Residential Sales for Helio Energy Solutions, a leading solar panel installation company in California. “This is smart since most seniors live on a fixed income and their electric bill represents a highly inflationary monthly expense. Since there is no obligation to pay the loan back, buying a solar system with a reverse mortgage is cash flow positive day one and thus frees up other income otherwise dedicated to paying for electricity.”
Additionally a solar panel system adds value to the home the day it is turned on! According to the Appraisal Journal, a home's value is increased by $20,000 for every $1,000 reduction in operating (energy) costs. Money saved from the reduction in energy costs can be spent on a larger mortgage or home, with no net change in the monthly cost of owning the home. In addition, the resale value of adding a solar system can be the highest of all possible home improvements.