Can You Refinance with a PACE Loan?

For Florida homeowners investing in hurricane-resistant upgrades like impact windows, PACE financing offers a unique path to fund vital home improvements. But what happens when you want to refinance your mortgage while carrying a PACE assessment?

The answer involves balancing Florida’s specialized financing programs with new federal rules—a process that requires careful navigation but offers viable pathways for proactive homeowners.

Understanding PACE Financing in Florida

PACE (Property Assessed Clean Energy) programs in Florida prioritize projects that enhance energy efficiency and storm resilience, making them ideal for homeowners seeking to fortify their properties against hurricanes.

Unlike traditional loans, PACE assessments attach to your property tax bill and remain with the home even after sale. This structure allows for repayment terms up to 20 years (per 2024 Florida reforms) and approval based on property equity rather than credit scores. For Floridians, common PACE-funded projects include:

• Impact-resistant windows and doors
• Reinforced roofing systems
• Solar panel installations
• Energy-efficient HVAC upgrades

These improvements not only protect homes but may also reduce insurance premiums and increase property value.

Refinancing Options with a PACE Loan

For Florida homeowners who have invested in hurricane-resistant upgrades through PACE financing, several refinancing options are available. Each pathway offers unique benefits and considerations, especially for those who have prioritized storm protection for their homes.

Government-Backed Loan Flexibility

Homeowners with government-backed mortgages have seen increased flexibility in recent years when it comes to PACE loans and refinancing. 

The Federal Housing Administration (FHA) allows homeowners to pay off PACE obligations through rate-and-term refinancing. This process, which has been available since 2018, requires settling the PACE lien during refinancing. 

New CFPB rules starting in 2026 will require lenders to verify repayment capacity through third-party documentation. FHA guidelines typically prohibit prepayment penalties, which can be advantageous when paying off a PACE assessment. 

Similarly, Department of Veterans Affairs (VA) loans offer comparable flexibility for PACE assessments. Lenders may require proof that PACE-funded improvements, such as impact windows, meet VA property standards. This requirement aligns well with Florida's focus on hurricane-resistant home upgrades. 

Both FHA and VA options can be particularly beneficial for homeowners who have invested in storm-resistant improvements, as these programs often recognize the importance of such upgrades in hurricane-prone areas like Florida. 

Cash-Out Refinancing

For homeowners with substantial equity in their property, cash-out refinancing presents an effective way to manage PACE assessments while potentially securing better overall mortgage terms. In this process, homeowners borrow against their home's equity to pay off the PACE assessment and consolidate it into a single mortgage payment. This results in a new mortgage with different terms, potentially including a lower interest rate or extended repayment period. 

Key points for Florida homeowners considering this option:

• Most lenders require a loan-to-value (LTV) ratio below 80% for cash-out refinancing.
• PACE assessments cannot exceed 20% of home value
• Comprehensive documentation of PACE project completion and current assessment details is necessary.
• Cash-out refinancing may have a temporary impact on credit scores.

Benefits of this approach include:

• Debt consolidation, simplifying financial management
• Potential tax benefits, as interest on the new mortgage may be tax-deductible (unlike some PACE assessments)
• Possibility of lower overall monthly payments, depending on market conditions

Specialized Refinance Programs

Some lenders offer tailored solutions to address the unique needs of homeowners with PACE assessments, particularly in hurricane-prone areas like Florida. 

Retroactive funding programs allow refinancing of completed projects up to 36 months old in some cases. This option can help secure lower rates on already-completed hurricane-resistant upgrades. Homeowners typically need to provide detailed records of improvements, including permits and contractor information. Contractors must now be licensed and provide detailed estimates under Florida's 2024 oversight rules. 

Another specialized option involves lien prioritization agreements. Some lenders work with PACE providers to negotiate agreements that allow refinancing while maintaining PACE assessments. This can enable homeowners to keep their PACE-funded improvements without disrupting their primary mortgage. 

These specialized programs often streamline the refinancing process for homeowners with existing PACE assessments and may have more lenient credit or income requirements compared to traditional refinancing options. 

To help you compare these options, here's a summary table:

How to Refinance with a PACE Assessment

Refinancing with a PACE loan requires careful planning and execution. Here's a streamlined guide to help Florida homeowners navigate this process:

1. Assess Your Current Situation: Begin by reviewing your existing PACE loan terms and remaining balance. Evaluate your home's current value and equity position. Check your credit score and overall financial health to understand your refinancing options.
2. Research Refinancing Options: Explore government-backed loan programs like FHA and VA, investigate cash-out refinancing possibilities, and look into specialized PACE refinancing programs. Each option has unique benefits and requirements, so thorough research is crucial.
3. Gather Necessary Documentation: Collect all PACE-related documents, including the original loan agreement, proof of payments, and detailed records of completed hurricane-resistant improvements. Prepare recent tax returns and pay stubs, and obtain a current credit report to streamline the application process.
4. Consult with Financial Professionals: Speak with a mortgage broker or loan officer experienced in PACE refinancing. Consider consulting a financial advisor to understand the long-term implications of your refinancing decision. If applicable, discuss potential tax implications with a tax professional.
5. Compare Lender Offers: Reach out to multiple lenders, including those specializing in PACE refinancing. Compare interest rates, terms, and fees carefully. Pay close attention to how each offer handles your existing PACE assessment to ensure you're getting the best deal.
6. Apply and Navigate the Underwriting Process: Select the refinancing option that best suits your financial goals and submit a formal application. Be prepared to provide additional documentation as requested and respond promptly to any inquiries from the lender. Remember that PACE refinancing may require additional review compared to standard mortgages.
7. Review and Complete the Refinancing: Carefully read all closing documents, paying special attention to how the PACE assessment is handled. Consider having a legal professional review the documents if you're unsure about any terms. Attend the closing to sign all necessary paperwork and ensure that the PACE assessment is properly addressed according to the agreed-upon terms.

By following these steps and working closely with financial professionals, Florida homeowners can successfully navigate the process of refinancing with a PACE loan. This approach allows you to maintain the benefits of your hurricane-resistant home improvements while potentially improving your overall financial position.

Why PACE Refinancing Matters for Hurricane-Prone Homes

For Floridians, refinancing with a PACE loan isn’t just about financial optimization—it’s about safeguarding investments in storm-ready homes. Impact windows, reinforced roofs, and other PACE-funded upgrades reduce long-term repair costs and insurance claims, making properties more resilient during hurricane season. 

Pro Tip: Homeowners who’ve used PACE for impact windows (like those installed by USA Home Improvement) can often refinance these projects at competitive rates, especially if completed within the past three years.

Finance Your Next Home Improvement Project with USA Home Improvement

While refinancing a PACE loan requires working with lenders, the initial step of securing PACE financing for hurricane-resistant upgrades is where companies like USA Home Improvement excel. 

They simplify the process of obtaining PACE financing by:

• Connecting homeowners with PACE-approved contractors for impact windows, roofing, and other storm-proofing projects
• Guiding clients through the PACE financing application process
• Offering expertise on eligible hurricane-resistant upgrades that can be financed through PACE

For a comprehensive overview of PACE financing options tailored to Florida's climate challenge, read USA Home Improvement's guide to financing your next home improvement project.

By partnering with experienced PACE financing facilitators for your initial upgrades, you can take the first step towards a more resilient home while keeping future refinancing options open.

Ready to finance your next project? Get a quote today!