04 Jun Everything You Wanted To Know About Pool Financing
Everything You Wanted To Know About Pool Financing
Our Finance Team is here to help guide you through the loan application process. We will answer all your questions about pool loans so that you can decide if financing a pool or backyard renovation is the right choice for you. Let’s get started!
What is required to qualify?
Lenders will want to see a credit score of 650 or higher with a history of on time payments. Foreclosures and bankruptcies must be at two years from being discharged.
Debt-to-income ratio will need to be 35% to 45% depending on the loan program. A good way to figure your debt-to-income ratio is to add up any monthly payment that is to a creditor (mortgage, car loan, credit card bill, etc..) plus an estimated pool payment amount then divide by your monthly gross income. We can help you calculate these figures.
Proof of income will be required for most loan programs. Variable income, such as commissions and bonuses, will need to have a two-year history to be counted towards your yearly salary amount. We do offer stated income loan programs, but those will have a higher interest rate.
You will need to submit proof that you are living in the home where the project will be installed. Most of the time, merely providing your driver’s license will suffice.
What types of loans are available, and what are the maximum loan amounts?
A secured loan is also called a second mortgage loan. Our lenders count the pool as an asset to the property before it is built, so the amount of equity you have in the home is usually not a factor.
Have lots of equity in your home? Then your rate could be even lower by applying for a HELOC. If you can maintain 80% loan-to-value while still taking out funds for a pool, then a HELOC might be a good option.
Secure loans have a $15,000 minimum loan amount and can go up to $250,000 for very well qualified buyers.
Unsecured loans are personal home improvement loans. Credit score and debt-to-income are the primary determining factors for credit approval. These loans fund quickly and have a maximum loan amount of $95,000.
Are you building a new home? Speak to your home mortgage lender about including a pool with your home purchase and how to maximize those funds available to you. Many first mortgage lenders will also ask that 50% of the pool price be placed in the escrow account as a show of good faith that the pool will be completed promptly. Clients are typically not made aware of this additional deposit, and this results in clients looking for assistance with these last-minute funds needed to close on the home. Many pool builders are not in a financial position to assist their clients with the additional holdback funds or charge a hefty fee. At California Pools & Landscape, we will place any holdback up to 50% of the pool price for our clients at no additional fee or hassle!
What terms and rates are available?
Interest rates are going to range between 5% to 9%, with the most common rate being 6.25% to 6.5%. Those with significant equity in their homes will be closer to 5%, and those with credit challenges may be closer to 9%. All loans have fixed rates with no prepayment penalties.
Secure loans have terms from 5 years to 20 years. We find that most customers choose the 15-year option as the rate does increase on the 20-year loan product. Unsecured loans have 5, 10, and 15-year term options.
How much are monthly payments?
A good rule of thumb when determining your monthly budget is to estimate a $90 payment for every $10,000 borrowed. So a $45,000 loan at 6.5% interest for a 15-year term is $392 per month. A $100,000 loan with those same terms would be $897 per month.
How long is the loan application process?
Unsecured loans typically take 5 to 7 days from application submittal to loan signing.
Secured loans take 4 to 5 weeks from application submittal to loan funding.
Promptly returning the lender’s request for documentation will dramatically speed up the process!
The good news is that with a signed contract and a $1000 deposit, we can start on the construction plans and permits while you go through the loan process, which will help to get the pool dug up to a month sooner. All loans offer 100% financing, so the deposit would be refundable once the loan is funded, and those funds are released to CPL.
How are the funds disbursed?
Secured lenders will mail you dual-party checks that are made out to both you, the pool buyer, and California Pools & Landscape. We will request a check during each of the major phases of construction (excavation, shotcrete, deck, and interior finish). You then endorse the check and give it to your Construction Manager or arrange for courier pickup.
Unsecured lenders will electronically disburse payments to California Pools & Landscape upon your approval or agreed upon date. Payment disbursement is prescheduled or requested at one of the major construction phases mentioned earlier.
How to get started?
Fill out our application at www.calpool.com/funding. It takes just about 10 minutes.
We are here to serve!
Here at California Pools & Landscape, we make no money on financing and do not charge you any additional fees for our services. We simply want to be your pool builder and help you find the best loan terms that fit your family’s budget. We encourage you to check with other lending sources and would be happy to compare those programs with the loan options that we offer. We have been doing this for 25 years, so let our talented staff help you make the right decision about financing your project.