5 Best Sources for Swimming Pool Financing

For many homeowners, paying cash for an in-ground swimming pool is not realistic. Fortunately, financing a swimming pool is common, and today there are more pool financing options available than ever before. Competitive interest rates and favorable repayment terms make it possible to move forward without letting cost stand in the way of owning a swimming pool.

Below are the most common pool financing routes to consider and how each one works.

Pool Financing Options

First Mortgage

If you are buying or building a home, you can include the cost of pool construction into your home loan. This is a very convenient option because you pay for the house and the pool all in one payment every month. The pool is treated as any other part of the home by its inclusion in the original home loan.

Most mortgages in the U.S. are for 30 years, so the cost of your pool is stretched out over the years into monthly payments. Over that period of time, the cost of the pool will not seem as significant to the borrower as it would on a shorter-term loan. All of these benefits, plus the fact that you can take advantage of historically low mortgage rates for pool financing, make this option extremely attractive to many homeowners in the market for a pool.

Second Mortgage

Many reputable pool builders partner with financial institutions to help homeowners secure pool financing without having to search for lenders on their own. A second mortgage pool loan uses your existing home as collateral and is often valued for its convenience and streamlined process.

Key characteristics include:

• Minimal closing costs

• Low fixed interest rates

• Low monthly payments

• Interest that is often tax deductible

Loan terms are typically based on the amount of equity in your home, although some second mortgage pool loans do not require existing equity. A good credit score is usually required, and many borrowers look for options that do not require mortgage insurance. In many cases, closing costs can be rolled into the loan, keeping out-of-pocket expenses low.

Home Equity Line of Credit

With a home equity line of credit (HELOC), you are turning the equity you have in your existing home into cash to finance pool construction. As with mortgages, you can write off interest payments on your taxes.  A HELOC is similar to a traditional second mortgage in that they are both loans drawn off the equity in your home; however, a home equity line of credit functions more like a credit card in that you are given a credit limit and you decide how much to spend within that limit.

With a traditional second mortgage, the loan is disbursed as a lump sum to be paid off in regular intervals. HELOCs generally offer flexible repayment options, which can be the deciding factor for borrowers when weighing financing options.

Unsecured Loan

This type of loan is not tied to the equity you have in your home (thus unsecured) and is a solid option for people with good credit scores. Interest rates offered typically depend on your credit score, and more emphasis is placed on having a good score since you are not using your home as collateral.

Well-qualified borrowers can get interest rates as low as 7% to 8% with an unsecured loan. Also, the approval process for these simple types of loans is typically very quick so funds are available right away, which is convenient for homeowners who are especially eager to get started on pool construction.

Credit Card

This is an option for people who have great credit and high limits on their credit cards. One advantage is that you don’t have to put your house up as collateral, so this is a good option for folks who may have an excellent credit score but who don’t have a lot of equity in their home.

If you plan to pay off your pool loan quickly, i.e. in under a year, you may be able to secure a credit card with a 0% introductory rate and actually finance your new pool without paying any interest at all. Most credit card transactions will incur a 3% fee on the amount charged.

Need more information before applying?

Looking for information on rates, terms, and monthly payments? Our finance blog answers all these questions and more. California Pools & Landscape can help you not only make the right decision on your pool design but also work with you on the ideal pool financing option.