5 pool financing options
Personal loans are frequently unsecured, which means you can’t borrow money without pledging collateral like a home or car. Rather, when determining whether to grant you a loan, lenders take your creditworthiness into account. A personal loan is given to you in one lump sum and is repaid over the course of two to seven years in monthly installments.
Personal loan amounts range from $1,000 to $100,000, with annual percentage rates between 6% and 6%. However, the exact loan offer you receive will depend on a number of factors, including your income, credit history, credit score, and other debts. Borrowers with high incomes, low debt, and good or excellent credit (690 or higher score) typically receive the largest loans and the lowest rates.
When personal loans work best: If you don’t have enough equity in your house to pay for a pool, you might want to think about getting a personal loan. Given that personal loans are frequently funded within a day or two of approval, it could also be a wise option if you need the money right away. Moreover, since loan amounts are set, they function best when you have a concrete estimate of the cost of your pool.
Pros and cons of financing a swimming pool with a personal loan
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Home equity loans
One type of second mortgage that you can borrow in one lump sum and pay back in fixed monthly installments is a home equity loan.
When you take out a home equity loan, you can borrow up to 85% of the value of your house (less the amount you owe on your mortgage). These loans have repayment terms up to five years, with average interest rates beginning at approximately nine percent.
When home equity loans work best: If you prefer fixed payments and have enough equity to cover the cost of the new pool, home equity loans work best. Since you can only borrow money once with this option, a precise cost estimate is also necessary.
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Home equity lines of credit
During the installation of the pool, you can take draws from an open credit line called a home equity line of credit (HELOC). Interest-only payments are permitted during the “draw period,” which is typically the first ten years. Following that, you have up to 20 years to repay the loan amount.
Typically, you are able to borrow up to 85% of the value of the house, less the amount you owe on the mortgage. The average annual percentage rate (APR) begins at approximately 9%, however the rate fluctuates over the loan’s E2%80%99 lifetime.
When home equity lines of credit are the best: If you’re worried about unforeseen costs or the possibility that the cost estimate will change, a HELOC is a good option due to its flexibility.
Pros and cons of financing a swimming pool with a HELOC
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Cash-out refinancing
You can obtain a larger new mortgage with a cash-out refinance than you do with your existing one. You pay off the previous loan with the new one and use the remaining funds to cover the swimming pool.
Your new mortgage will have a different rate and repayment period because it’s being replaced. Common mortgage repayment terms are 2015 and 2030 years, with rates typically ranging from 6% to 8%.
The best situations for cash-out refinancing are those in which you require a sizable loan for a significant pool installation. Ideally, the mortgage rate you receive is also lower than it was before.
Pros and cons of cash-out refinancing for a swimming pool
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Contractor financing
Certain contractors and companies that install pools provide unsecured financing via a third-party lender. Companies have different amounts, rates, and terms, but you could borrow up to $200,000 or more. Repayment terms are up to 2020 years, with rates starting at about 5%; however, maximum rates may be as high as 5%.
After you and the contractor have decided on a budget, this kind of financing is typically provided in person. However, it’s a good idea to take a day or two to review your alternatives.
When contractor financing makes the most sense: If it’s your lowest-rate option with terms that work with your budget, then go for it. Additionally, since approval can come through quickly, it works well if you want to get started right away.
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Steps to finance a pool
- Determine the pool’s cost. Consult with contractors to determine the amount you will need to borrow. Because options such as home equity and personal loans are lump sums, you must have a firm estimate in order to apply for the appropriate amount.
- Compare financing options. Compare your loan options up to that amount once you have a reliable cost estimate. For instance, if the cost of the new pool exceeds your equity loan limit, you might be better off getting a personal loan.
- Compare rates. Once you’ve selected a financing plan with the appropriate loan amount and payback schedule, shop around for the best deal from different lenders.
- Make a repayment plan. Determine whether your monthly pool loan payments are within your means by doing the math. Over the course of the loan, arrange to make timely payments each month.
- Apply. Once you’ve chosen a lender, submit an application. This action typically results in a hard credit pull, which will temporarily lower your credit score.
How much do pools cost?
Building an in-ground or above-ground pool will cost different amounts depending on the materials used, the size and depth of the pool, and whether or not you want to add features like a diving board or waterfall.
As the cost estimate solidifies, your financing options become more limited. For an above-ground pool that is less expensive, for instance, a cash-out refinance might not be the best choice because the closing costs might exceed the cost of the pool.
In-ground vs. above-ground pool cost
The cost of the pool is largely determined by whether it is above-ground or in-ground. According to the home improvement website HomeAdvisor, the cost of an above-ground pool is $700 to $5,000, while an in-ground pool can cost anywhere between $20,000 and $100,000.
Other installation costs to consider
Size: According to HomeAdvisor, the cost of an above-ground pool is $10 to $15 per square foot, while the cost of an in-ground pool is $50 to $125 per square foot. A 400-square-foot in-ground pool can be purchased for as little as $20,000, while a 600-square-foot pool costs $30,000.
Materials: An in-ground pool’s construction materials could have a significant financial impact. According to HomeAdvisor, vinyl pools typically cost between $20,000 and $40,000, whereas concrete pools are estimated to cost between $35,000 and $65,000.
Add-ons: Based on HomeAdvisor, these are the prices for a few pool accessories.
- Diving board: $300 to $5,000.
- Covers: $600 to $2,200.
- Waterfall: $1,500 to $5,000.
- Heating: $1,800 to $4,000.
Pool maintenance costs
Cleaning: During pool season, you should set aside money for routine pool cleaning if you don’t already do it yourself. The average cost of this service, according to HomeAdvisor, is $115 per visit.
Upkeep: You might also need to winterize your new pool and check the pH and water levels. According to HomeAdvisor, hiring a pro to maintain your pool can run you anywhere from $110 to $351 a year.
Repairs: After enough use, your pool will likely need repairs. Some fixes, like pool heater repairs, can cost more than $1,000, but these can be minor fixes that only cost $100 or less.
FAQ
What credit score do you need to finance a pool?
Who should apply for a pool loan? Generally speaking, you need a credit score of at least 600 to use a personal loan to pay for a pool. Some lenders may also have income requirements, which will vary. HELOCs and home equity loans frequently demand a score of 680 or above.
How long do most people finance a pool?
A pool loan’s typical duration can vary from one to twenty years, contingent upon your requirements and the amount you need to borrow.
How do most people afford a pool?
Due to the high cost of installing a swimming pool, many homeowners resort to taking out loans to cover the installation. After determining the total amount of money required for your new pool, compare lenders and shop around to select the best personal loan option.
Is it a good idea to finance a pool?
Loans for swimming pools can be costly and result in long-term debt. Knowing all of your financing options for a pool will help you determine which loan is best for you and whether borrowing the money is worth the expense.
Read More :
https://www.nerdwallet.com/article/loans/personal-loans/swimming-pool-financing
https://www.forbes.com/home-improvement/pool/how-to-finance-a-pool/