If you’re like most homeowners who are interested in installing an in-ground swimming pool, paying cash would be a difficult (if not impossible) proposition. It is quite common for pool owners to finance the cost of building a swimming pool, and in this day and age there are more options than ever before to do so. There’s no need to let a price tag break your dreams of owning your own swimming pool. Most borrowers can obtain pool financing at competitive interest rates and favorable repayment terms. Read on to learn about the different pool financing routes you can take and see which fits your situation best.
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 to finance your house and pool make this option extremely attractive to many homeowners in the market for a pool.
A reputable pool builder will have financial institutions they partner with to offer you financing options so you don’t have to look to outside sources to help pay for your dream pool. This source of financing is advantageous in its convenience: You don’t have to shop around for lenders, and your pool builder will help facilitate the deal with the lender for a smooth experience. A second mortgage pool loan uses your existing home as collateral for funding. This type of loan offers the borrower minimal closing costs, low monthly payments, low fixed interest rates, and the interest paid is often tax deductible. The amount of equity you have built up in your home will be used to determine the terms of the loan — the more equity you have, the better terms you can expect to be offered — however, it is not necessary to have any equity to qualify for a second mortgage pool loan. Typically, these types of loans require that you have a good credit score. Look for second mortgages that don’t require you to pay mortgage insurance. Often, you can also roll your closing costs on these mortgages into the loan so you pay almost nothing out of pocket when you close.
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.
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.
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.