How_To_Finance_Pool

How to Finance a Pool

Nothing is more exhilarating than jumping into your own pool to cool down on a hot Summer day! And few things are more relaxing than soaking in a hot tub after a long day at work. If you think pools and hot tubs are just for the ultra-rich, think again. Financing the pool of your dreams is not as difficult as you may think, and with the following tips, it could soon become a reality.

Installing a pool adds value to any home, which can help you recoup your investment if you decide to sell in the future. However, adding a pool to your property is no small project. According to the River Pools and Spas Inground Pool Cost Guide, a larger pool can cost upwards of $24,000 for materials, not including installation and delivery. A smaller, basic fiberglass-lined pool could run around $17,000, not including financing costs. The interest rate on a loan for a pool this size can range anywhere from 4.29% to 13.29%. Because of the higher cost of pools, it is important to choose a financing option that works with your budget. This article provides a list of financing options you should consider.

Financing with a Personal Loan

LendingClub offers personal loans for pools up to $40,000, with flexible, unsecured personal loans. Another lender, LightStream, provides funding within the same day the loan is approved.

Pros
  • Personal loans are unsecured. There is no collateral on the loan, so if for whatever reason you are not able to repay the loan, the financial institution cannot claim any ownership of your property.
  • Personal loans are based solely on your income and credit history. An established credit history and a steady source of income will improve your chances of getting a personal loan for a pool.
  • Personal loans offer fast funding. Due to the nature of the loan, you can get the funds almost immediately after approval and can start the construction process right away.
Cons
  • Personal loans are based on your credit. If you don’t have a great credit history or adequate income, a loan denial could be inevitable. Even if you are approved, having bad credit will probably leave you paying higher interest rates over the course of the loan.

Learn how to apply for a home improvement loan here, and how to apply for one without any equity here.

Financing through pool companies

Many pool companies offer direct financing. Although they don’t always have the best rates and terms, they are often willing to work with you when other lenders won’t.

Pros
  • Personal loans are unsecured. There is no collateral on the loan, so if for whatever reason you are not able to repay the loan, the financial institution cannot take your property.
  • Both secured and unsecured loans are available. This gives you more options to secure collateral or not. You can decide whether or not you would like to risk your property being seized if there are repayment issues.
  • Varying interest rates. Since you can choose from secured and unsecured loans, interest rates vary greatly, and you have the ability to choose which option works for you. Some pool companies offer interest rates as low as 3.99% for those with excellent credit.
  • Quick approval time. Most direct financing departments approve you within 24 hours.
Cons
  • Pool companies work with a small group of lending partners. This limits your options to shop around, which is a crucial step to finding the loan that works best for you. You may be missing out on other loan types that work better for your financial situation.

Financing with Home Equity Loans

A home equity line of credit, or HELOC, is a loan that uses the value of your home as collateral. A similar option is to get a second mortgage, which also uses your property as a guarantee. Your maximum loan amount will depend on the value of your home compared to its current market value.

Pros
  • A HELOC is a flexible financing tool. You draw funds against the line of credit for the project as needed and interest is only paid on the dollar amount drawn.
Cons
  • Your home is used as collateral. This makes your home at risk of foreclosure if you fail to repay the loan.

Refinancing Loans

Refinancing your mortgage may give you the ability to afford a pool installation if the new loan amount is larger than your current mortgage balance.

Pros
  • Lower interest rates and better terms. Refinancing your mortgage could lower your interest rates as well as provide an inexpensive way of financing your pool.
  • A simpler repayment. The pool installation costs may also be combined with the mortgage, making repayment a hassle free process.
Cons
  • You have to pay closing costs. These extra fees can make refinancing your mortgage not as appealing to some. Be sure to compare the fees with how much you will save over the life of the loan.
  • Your home is collateral. If you default on the loan, your home is used as an asset that can be seized by the lender.

In any situation, shopping around is vital. Whether you opt for a loan through an institution of your choice or use an online lender that matches your needs, be sure to compare at least three options, and research the lender thoroughly before making a decision on financing. Visit SuperMoney’s personal loan page for an extensive list of lender reviews and user comments.

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