HERO program or pay cash?

[J.P.M.]

How has HERO added 15 points to the loan? That does not seem to make any sense?

Up front fees. Some are less. Apply for one and see. You're dealing with a bank. Expect to get screwed.

[rfay]

I'd only add here that while HERO programs can have some have advantages, I've seen as much as 15 points added to the loan. READ EVERYTHING CAREFULLY BEFORE SIGNING.

How has HERO added 15 points to the loan? That does not seem to make any sense?

[chargers]

Hero financing can be helpful, but can also come with a sizeable upfront ding of the order of 10%. or more.

Also don't forget about the accrued interest rate, because if you get your system installed now you wont get this reflected property tax bill till next year; so its great that you are not paying for anything, but nothing in life is free as they say, I just called them today, but for a 17000 loan, it will accrue 1100 dollars in interest rate that is tacked on the loan when you start payment in November, and from what HERO said you cannot do anything about that, ie pay for it etc.

Also there is a maintenance fee per year (although this is the smallest amount $35 per year that you should worry about).

And I would be careful about deducting the principal, because technically you cannot get a deduction for that.

with that said, so I would still do HERO if that is my only option, but there are better options out there.

[J.P.M.]

Was there an origination fee?

Hero financing can be helpful, but can also come with a sizeable upfront ding of the order of 10%. or more.

[chargers]

HELOC is probably your best bet if you want a 5 year payoff.

I did HERO over 15 yrs because I already had a HELOC.

The effective interest rate in HERO for 5 yr is actually negative or less than 0% and that's just by using interest as deduction.

There are no prepayment penalties for HERO. Same is usually not true for HELOCs.

I financed $11,000 and payment is at $120 before any tax savings, should be about $100 per mo after tax savings.

Aggressive CPAs may deduct full amount but technically you should only deduct interest.

Was there an origination fee?

[sklim1]

Same Situation but with Added Complexity!

Thread still Alive?

So the HERO thing brought me here but in addition to this I want to see if I should do a prepaid lease vs. HERO.

Here's my situation.

Option #1: Prepaid lease
Discount over about $3000 over the purchase option
They take the rebate upfront and deduct 30% rebate from my price
No property lien against the house (supposedly) since it's prepaid (per my research and told)
I'm planning to pay this off by credit card (0% interest for 1 year) and hoping to just hop around 0% BT's on 0% credit cards as they come while paying off as much as can monthly.
Monthly payment: $123

Option #2: Purchase (via HERO)
About $3000 more PLUS financing fees and taxes through HERO
Write off principle and tax (The only reason I considered this)
Monthly payment: $288


A few things that preventing me from choosing one option over the other.

1) Currently, I deduct a portion of my electric bill because I have a home office. Can I continue to do this with Solar? E.g. deduct a portion of my lease payment to my CC? Even though there's no electric bill but I have to paid the bill upfront for the electricity.

2. Does a prepaid lease truly have no liens against my property?

3. What exactly is the Fanny Mae refinance situation with PACE (Hero) loans on the property? I hear they refused to do loans or refinancing for home with HERO back in 2010. Is this still the case?

4. Anyone actually tried selling their house with HERO? I heard the marketability can be affected. I'm interested in first hand experience people that actually encountered this.

5. Anyone get audited for writing off 100% of a HERO loan? I rather not be red flagged whether you end up winning or not with this HERO fiasco.

6. Which option would you take?


TIA!

[J.P.M.]

Plenty of other investment options that can yield more than 0.5%.... Some with very little risk. It's common business knowledge that carrying some debt is healthy and beneficial from a business perspective.

Smart businesses use debt as a way to leverage assets and increase profits. That's part of why it's "acceptable" to do so. Most consumers use debt to buy stuff they want but don't have the cash for, and often/usually wind up further behind the 8 ball satisfying their wants.

[gvl]

Do not forget about AMT if it applies, iirc property taxes are not deductible under AMT.

[silversaver]

we are not talking about investment, it is the "extra" cash you leave around doing nothing.

[Gmoney!]

Plenty of other investment options that can yield more than 0.5%.... Some with very little risk. It's common business knowledge that carrying some debt is healthy and beneficial from a business perspective.

[silversaver]

Mostly but not completely +1 on that. To me, leaving some in the bank for a rainy day has its advantages.

Most if no all the people paying cash on their system already have extra money in the bank collect less than 0.5% interests.......

[SunEagle]

Mostly but not completely +1 on that. To me, leaving some in the bank for a rainy day has its advantages.

I agree. Glad I had a few extra 1000 lying around to help pay for the new AC system I needed to get installed.

It is a royal pain in the wallet if more than one major appliance or auto requires serious repairs or replacement in the same year.

[J.P.M.]

You pay them money on low interest(claim) but with high bank fee(like those 0% interest credit cards but charges you 4% transaction fee.), and you trying to get part of it from tax deduction. (you are happy)

Where did we find all these smart ideas? true, American way of saving money. very smart.

if you have cash, use it. leaving in the bank will do you nothing.

Mostly but not completely +1 on that. To me, leaving some in the bank for a rainy day has its advantages.

[TypeRx]

Thanks guys for the feedback. I have no problem just paying in cash -- I actually would prefer NOT to pay this down over 5 years if interest is involved. The only factor that would swing that is if I could deduct the full HERO (principal+interest) payments along with my property taxes. It appears this is a controversial area that might not fly if audited. I am waiting for an opinion from my accountant but I haven't heard from anyone here that used the program that has also deducted the full amount. So, probably a no-go.

Regardless, excited about getting a system up and running before the peak of summer. Last year we avoided A/C use (it was out of sticker shock from CA electric prices...we moved here recently from the midwest) so our use only averages 966 kW/month but we will definitely be more liberal with the A/C with solar.

[silversaver]

You pay them money on low interest(claim) but with high bank fee(like those 0% interest credit cards but charges you 4% transaction fee.), and you trying to get part of it from tax deduction. (you are happy)

Where did we find all these smart ideas? true, American way of saving money. very smart.

if you have cash, use it. leaving in the bank will do you nothing.