The HERO program, otherwise known as the Home Energy Renovation Opportunity, helps you finance energy efficient changes to your home. The money you borrow becomes a lien on your home. In order to pay it back, you make payments with your property taxes. The PACE legislation, Property Assessed Clean Energy legislation, provides the funding. This is a group of government programs and businesses who work together to make it possible. Qualifying for this program works differently than any other loan program, though.
Qualifying for the HERO Program
Qualifying for the HERO program is rather simple. You just have to meet the following guidelines:
- You must have at least 10% equity in the home
- You must be current on your mortgage
- You cannot have more than one 30-day late payment on your mortgage in the last 12 months
- You must be current on your property taxes
- If you paid your property taxes late within the last 3 years, it cannot be more than once
- You cannot have any other liens on the home aside from your mortgage(s)
- You cannot have any bankruptcies within the last 2 years
The Changes You Can Make
Any changes you make with the HERO program must be energy efficient changes. A few examples include:
- Solar panels
- New windows or doors
- High efficiency air conditioner or furnace
- Energy efficient roofing
First Lien Position
Something very important to know about the HERO program is the fact that it is a lien on your property. However, not only is it a lien, it takes first position over any other debt on your property. This includes your mortgages. If you were to sell the home, you have to pay the HERO program off before you pay off any mortgages. If you plan to refinance, the same is true. Although it is not a requirement to pay the HERO program off when you refinance, no lender will be willing to take second lien position after providing new funding.
Miscellaneous Facts About the HERO Program
Unlike a standard home equity loan, you do not make monthly payments on your HERO loan. Instead, you pay them with your property taxes. You will see them as a line item on your property tax bill. The amount you may receive is based on the equity in your home and your payment history. You can secure terms that range between 5 and 25 years for repayment. You never have to pay any fees upfront. In fact, the contractors agree that they will not be paid until the work is complete.
One more fact you should be aware of is the transferability of the debt. If you sell the home, you may be able to transfer the debt to the new owner. However, many buyers are unwilling to take on the extra payment. They often require the seller to pay the debt off before they take ownership of the home. It can cause difficulty for those trying to sell their home, which is why paying it off beforehand is the best choice.
The HERO program can provide you with flexible financing to make energy efficient changes to your home. You do not have to go through the loan process and you do not have to pay the high fees that mortgages cost. However, you will have to make the payments with your property taxes. If you escrow your taxes, your mortgage company will increase the amount they collect in order to account for the new, higher payment.