Everything You Need to Know About Financing a Pool
As you start to learn how to finance a pool, you’ll discover that you have several options. Personal factors and unique conditions will affect your preferences when it comes to your pool. Consider those factors as you decide on the best financing option for your swimming pool construction.
How to Finance a Pool: Know the Most Common Options
Even before you begin the pool permit process, you’ll need a budget and the financial backing to start your project. This brief look at the most common financing options can help you choose the best course of action for financing. Factors such as your mortgage payment history, credit score, and debt-to-credit ratio may affect your choice.
Take Out a Home Equity Loan
This option will only work if you have years of equity built into your home. To determine your home’s equity, subtract the amount you owe on your mortgage from the home’s market value. This will tell you how much equity you have invested in your home. At most, you can only borrow up to 85% of the property’s total equity.
The interest rates on home equity loans are lower and fixed, but they come with some degree of risk. If you miss a payment, your home will go through the foreclosure process.
Use a Home Equity Line of Credit (HELOC)
At first glance, a HELOC seems like the perfect way to finance a pool. Since you can borrow money as you need it, you won’t feel tied to a strict budget. This makes it easier to pay for hidden pool costs as the project progresses. Keep in mind that you’re using your home’s equity as collateral, so missed payments can lead to foreclosure.
Unlike a home equity loan, a HELOC comes with a variable interest rate. Along with giving you the ability to continue borrowing, the variable rate can lead to larger payments over time. As long as you feel certain that you can track your borrowing and keep up with payments, t deer his is a good option for homeowners with plenty of equity.
Look for a Good Personal Loan
If you are wondering how to finance a pool without using your house as collateral, consider looking into an unsecured personal loan. While you don’t need equity, you do need good credit. A score of 740 or higher can help you qualify for a 5% interest rate. A personal loan comes with a fixed rate and fixed repayment terms.
Fixed terms make it easier to track your repayment history and determine when your swimming pool loan will be fully repaid. By shopping for lenders, you can find a bank that offers low or zero fees.
Ask Your Builder About Their Financing Options
If the previous financing options don’t appeal to you, consider financing through your pool builder. This alternative keeps every part of the project under one roof, but the convenience comes with a higher cost. You may pay more in interest and face a longer repayment term.
If you haven’t built equity in your home, builder financing can help you reach your loan goal sooner. Although you should always read financing for loans and their terms carefully, it’s especially important when using pool financing options through your builder.
What to Consider Before Financing Your Swimming Pool
Aside from the cost of pool labor, materials, and equipment, the cost of financing will affect the pool’s total cost. Take a look at the following factors and interest rates to determine whether this is the right time to build a custom swimming pool.
Find Out How to Get Low Monthly Payments for Your Pool Loan
When you bought your house, you probably took time to improve your credit and set a reasonable spending limit. You can do the same thing before looking for swimming pool financing. Review your credit history and credit score and make sure the records are accurate. Any negative discrepancy can adversely affect your score and make it harder to get pool loans.
Establish a good repayment history with utility companies, credit card companies, and your mortgage lender. If you’re behind on loan payments, catch up and stay current. These steps will help you establish yourself as a good risk, so you can qualify for more favorable loan terms.
Think About Your Plans for the House
Give some serious thought to your plans for the house before you apply for swimming pool financing loan. If you’re open to selling the property, this is a poor time to finance any home renovation. When you are using a HELOC or home equity loan, you’ll have to repay any money you owe before you can list your home for sale.
You won’t have to worry about linking a personal loan to the deed, but you will still owe money on property you no longer own. The best option is to wait until your plans change before financing a swimming pool.
Consider How a Swimming Pool Will Affect Buyer Interest
You may not sell your house for several years, but you should still think about the market. In some areas, homes with swimming pools sell fast, and buyers are willing to pay more for those properties. In other areas, buyers resist homes with swimming pools. It takes longer for those houses to sell. The seller might have to offer a lower price to finally sell off a house with a swimming pool.
Assess Your Existing Debt
While thinking about how to finance a pool, consider repaying your existing debt. A good credit score will help you obtain more favorable borrowing terms. Consider paying off your high-interest debt first. Alternatively, paying off low-interest debt through a higher monthly payment makes it easier to satisfy more creditors within a shorter time frame. Check out a loan calculator to see your repayment options. Either option will help you establish yourself as a reliable borrower for your pool loan.
Work With the Leading Pool Builders in the Tampa Bay Area
When you partner with Tampa Bay Pools, we’ll be with you as you navigate every step of the pool planning and pool building process. We can help you find the right loan amount, and loan terms and get through the permitting procedure as painlessly as possible. Contact us to start planning your swimming pool project today.