pool finance

How To: Pool Finance Methods

Ah, swimming pools!

They are some of the things most homeowners wish they had, especially during those hot summer months. Would you believe there are over 10 million swimming pools in the United States? Swimming happens to be the most popular recreational activity for kids and teenagers, so it’s understandable if you also want one.

So, what’s the one thing holding you back? Possibly the financing because building a pool can be quite expensive, more so if you want an inground pool. However, have you thought about pool finance options?

There are several pool financing methods you can try out, some of which we have discussed below. There is no one best solution for everyone because it will depend on your credit score and how much pool you can afford. 

Here is a breakdown of all those pool finance methods, and we hope by the end you’re able to make an informed decision. 

How Much Swimming Pool Can You Afford?

The price of a pool widely varies depending on whether you want an above-ground or in-ground pool, the size, and shape of the pool, how leveled the ground is, the construction materials, any add-ons like a slide, diving board, or hot tub, etcetera. 

Additionally, your local municipality or your insurance policy may require you to install a fence around the pool to prevent accidents. This means that your choice will drastically affect the overall costs of your swimming pool.

A Breakdown of the Most Viable Pool Finance Options

Now that you have determined the kind of pool you want, it’s easier to determine a price estimate or have a professional pool installation company calculate everything for you, including the installation costs. Now, you can have a secure or unsecured pool finance loan, and your option may come down to your credit score. 

You can take out a personal loan if it offers you the best pool financing rates. However, there are better options that you should try first because they are likely to offer you better pool financing rates such as home equity loans, cash-out refinancing, and home equity lines of credit. All of these options come with their pros and cons, so choose what suits you best. 

Home Equity Loans

Home equity loans are known as second mortgages, and once you apply for one, you’ll receive a lump sum of money at a fixed interest rate. 

Essentially, you may have to pay for it in 10 to 15 years, and any fees associated with the loan will highly depend on the lender. One of the major benefits of a home equity loan is that the interest rates are usually lower compared to other pool finance options, and the interest could be tax-deductible.

The process of getting a home equity loan, however, is quite lengthy and tedious, and you’ll be placing your home at risk of foreclosure if you’re ever unable to pay the loan in the future. It’s essential for you to have sufficient equity, and most lenders will require at least 15 to 20 percent. 

A higher credit score will give you an easier time qualifying for the loan, and you’ll have lower interest rates as well. The lender will also scrutinize your income, and the higher it is, the better debt-to-income ratio you’ll have. 

Home Equity Line of Credit

A home equity line of credit or HELOC is another viable swimming pool financing option that lets you borrow money against your home. The lender will appraise your home’s value, check your remaining mortgage, and scrutinize your debt, credit history, and income to determine how much you deserve. 

Unlike a home equity loan where you receive a lump sum of money, when you get a HELOC loan, you’ll receive a credit card or blank checks that you can use to withdraw funds. 

This gives you the advantage of only withdrawing the funds you need whenever you need to. With this type of loan, you’ll only need to pay the minimum amount, and the interest rates will vary with the lender. You can ask to have a fixed interest rate, which some lenders agree to. 

On the downside, the fees associated with HELOC loans are quite steep. You’ll start with a home appraisal fee, an application fee, and the closing costs as well. You should compare lenders before you settle for a lender to scrutinize the lowest fees. 

Cash-Out Refinancing

A cash-out refinancing, or a cash-back finance loan is a new mortgage that you take for a lot more than your current outstanding balance. You get the difference between the new and old mortgage in cash. Suppose you need $20,000 for your new swimming pool, and you still owe $100,000 on the $200,000 mortgage you have for your home. 

You can refinance the loan for $120,000 and use the extra $20,000 to build your new pool. One good thing about refinancing your mortgage is that you can get a lower interest rate than you currently have. 

However, if you currently have a low rate, it may not be suitable because essentially, it’ll come with a higher interest rate compared to a HELOC or a home equity loan. There’s also a high chance you may not qualify because most lenders view this as a high-risk loan. The loan could be tax-deductible, but you should expect high closing costs.

In-House Financing

Some pool building companies opt to partner with financing institutions to offer pool loans to homeowners, and you may find this to be a viable option. This essentially means that you need to find a pool builder first, and they’ll source the loan for you. 

This is a convenient option because the builder already has a network of lenders, and you can choose one that’s suitable for you. Of course, you need to consider the professionalism of the swimming pool builder and their ability to build your dream pool and not just their ability to get a loan for you. 

Get a Personal Loan

A personal loan is another viable option because you can practically do almost anything you want with it, including building a pool. You can get a personal loan from online creditors, credit unions, or banks, so shop around for the best option. Your credit score will determine whether you can get an unsecured personal loan and what interest rates you qualify for. 

Which Pool Finance Option Is Best for You

These are some of the top options that you can use for your pool finance. Consider all the pros and cons associated with each option before settling and compare the lender to ensure you get the best pool financing rates available. 

Now that you have an idea where to get the loan check out our website for amazing custom pool ideas or better yet give us a call, and we’ll discuss how we’ll build you your dream pool just like you want it!