Is a Mosaic solar loan the best option for financing solar panels?
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If you’re considering installing solar panels on your home, you may be researching different solar loan companies. Solar loans are a common way to finance the cost of installing solar panels on homes and businesses. One of the most popular companies offering solar loans is Mosaic, which just surpassed $7 billion in loans for solar and environmental improvement home projects.
We spoke with the team at Mosaic to understand what makes their loans so popular, and so necessary for homeowners who cannot pay cash for solar systems.
Billy Parish, founder and CEO of Mosaic, recognized the need for financing options that can help make home solar a reality for as many Americans as possible.
“The urgency around climate change and its impact on our communities continues to escalate, and we must make it as easy and affordable as possible for even more families to make the switch to solar this year,” said Billy Parish, founder and CEO of Mosaic. “We have been offering residential solar financing options longer than anyone else, which gives us more data with which to underwrite and price our loans. We’ve established ourselves as a leader in cost of funds through our disciplined approach and consistent performance, and we are passing the benefit of that advantage through to our customers.”
We’ll walk you through what a Mosaic loan covers, how it differs from other financing options, and whether or not it’s right for your specific situation.
Mosaic is the largest solar loan underwriter in the customer-owned residential solar market. In fact, Mosaic has helped 220,000 homeowners install solar panels with their affordable loan options.
Mosaic has a broad network of solar contractors and local solar installers around the country offering their loans. Even large solar companies like Vivint offer Mosaic loan products.
Alongside their loan products for solar systems, Mosaic provides finance alternatives for other home improvements, such as energy efficiency improvements and home batteries. Upgrades they cover include:
As of August 2022, the average cost of solar panels per watt in the U.S. is $3.00/watt, according to data collected by SolarReviews. This makes a typical 6 kW solar system $18,000 before the federal solar tax credit; or $12,600 after claiming the credit.
Mosaic provides loans between $10,001 and $100,000. This range can certainly meet the needs of home solar installations.
Each solar installation is unique, and Mosaic has loan products that can be customized in most situations to fit your specific circumstances. Terms, loan amounts, interest rates, and monthly payments will vary depending upon your needs.
Mosaic solar loans are long-term; they range from 10 to 20 years.
Mosaic also offers a special tax credit loan at a higher interest rate with a shorter term to cover the period until you are refunded the solar tax credit, which is worth 30% of solar system cost until 2032. This period is typically between 12-18 months, depending on what time of year you install your solar system.
If you do wind up going for this bridging loan, it means you will have two solar loans: one short-term, and one-long term, to fund your project.
Interest rates on Mosaic loans vary depending on the packages that are offered by your solar installation company and which of those specific loan products you choose.
Recently, Mosaic announced interest rate options that range from .99 to 1.99%, although rates offered will change based on the marketplace.
For more information about finding the best rate, read our homeowner’s guide to finding the cheapest, best solar home loans.
In general, your credit score may need to be 700 or higher for a solar loan from a traditional financial institution like a bank. However, specialized solar loan companies have more flexibility, especially because they know and understand the solar market.
They also know that financing includes necessary permits as well as system installation. Mosaic says that they have progressively increased loan disbursements to customers with credit scores of under 700.
In fact, it claims to underwrite loans for borrowers with FICO credit scores that are around 640.
One popular option that Mosaic offers is its 20-year zero money-down loan, in which repayments only start once the solar system has been installed.
The longer loan term means smaller monthly loan repayments and these are typically lower than the monthly electricity bill savings from your solar panels. This means that with this loan, you will be cash flow positive from the very first month of your solar installation.
But, due to the nature of a loan and the built-in interest within it, loans wind up costing more than if you just paid cash. With that said, cash is not a viable option for every household.
As the consumer, you have a variety of financing resources for your solar installation. The type you opt for depends upon your circumstances and priorities.
You can speak to your bank about extending your home loan, either through a refinance of your existing mortgage or a HELOC loan (a home equity line of credit). The downside of using your bank is that you have to organize the loan yourself, whereas specialty loans for solar are arranged by the solar installation company you choose.
If you want to use your bank for a line of credit or home equity loan to finance your solar panel installation, you can expect to wait for several weeks until the loan closes. You will also need to have considerable home equity and a favorable debt-to-income ratio in order to be approved.
Because solar energy is still considered a newer technology, some conventional financial institutions don’t eagerly seek out consumers in this loan sector. You will find that a specialized solar loan provider like Mosaic will likely be more prepared to answer all your questions regarding solar loan products.
In addition, Mosaic has a much quicker approval process than a regular bank. With Mosaic, customers are frequently approved that same day.
Another key difference between Mosaic and a traditional bank is Mosaic’s in-house customer service; unfortunately, however, there are customer reviews that purport this service to be less than ideal.
If you search for Mosaic online, you might find some negative reviews. We checked out Reddit, Yelp, and other sources for a broad understanding of customer experiences. Generally, the most negative reviews have to do with not-so-great customer service.
There are also a fair amount of reviews from people who appear to be upset at what the loan contract contains.
With that said, it is a fact that taking out a loan for any home improvement could be challenging when it comes to transferring ownership of the loan to a new homeowner. This is not necessarily Mosaic’s fault, seeing as transferring any type of loan to a new homeowner is rarely a smooth process.
Also, Mosaic does not market its loans directly to consumers, so many of the negative experiences that customers have had stem from negative contractor activity or relaying of incorrect information. These experiences do not necessarily reflect the products that Mosaic has to offer.
Make sure to thoroughly read your loan contract so that you know you are subject to the best rate possible and that you are not signing anything you do not understand.
Solar panels are not cheap. While paying cash is ideal, most homeowners are not financially capable to do so. Typically, when shopping for a solar loan, it is best to go with a rate that will either cost the same as your current electric bill or less.
In some states like Arizona or California, electric bills can be above $500 a month in the summer. Because of this, financing a solar panel system for a couple of hundred dollars a month via Mosaic is actually a better deal.
One of the main reasons that homeowners choose to install solar is because it saves them money. Financing a solar system can help many more homeowners transition to renewable, clean energy.
Mosaic's solar loans are not the only option on the market. We recommend doing some more research to ensure that you secure the best loan for your needs. There are plenty of home solar loan companies in the marketplace, including LightStream Financial, Sunlight Financial, GoodLeap, SunRun, and SunPower.
We do a deep dive into each of these companies here: Top 6 solar financing companies
When it comes to paying for your panels, entering a solar lease or power purchase agreement (PPA) is also a possibility. Keep in mind, though - despite once being popular in the solar power industry, these options have fallen out of favor because they usually don’t offer the best financial savings.
Another issue with these financing methods is that the solar company retains ownership of your solar panels until the end of the term of the lease or PPA. This also means that the solar company retains the incentives the system is entitled to, such as the federal solar tax credit.
Another option is a home equity loan, which is similar to a HELOC loan, and allows homeowners to make fixed loan payments on the cost of a solar panel system.
It is important to note that Mosaic, like other solar financing companies, charges an origination fee. This fee can make the cost of the solar system more expensive than if a homeowner just paid cash or went with a home equity or HELOC loan.
So again, researching the best option for you is imperative. Make sure you fully understand what is in the contract before you sign and know that the collateral for not paying loans can, in fact, be your home.
If you want to maximize the financial benefits from your solar energy panels, then look at purchasing the system outright by either using a solar loan like Mosaic or by paying cash. The good thing about choosing a Mosaic loan is that once it is paid off, you completely own the solar system on your roof. That is not the case for leased solar panels, and it means that you can keep generating solar power for years after your lease is paid off.
You can calculate how many solar panels you need for your specific home and see how much they will cost based on the prices of systems offered by solar companies in your city by using our solar calculator. The calculator can also put you in touch with local solar panel companies that offer Mosaic solar loans.