Installing a swimming pool at your home can be expensive. Typically, the average cost of in-ground pool is nearly $50,000. Hence, financing may be required to install a pool.
Before choosing a pool loan, you will need to select the type of pool that you want to install. Some common types of pools are above ground pools, fiberglass pools, vinyl pools, and concrete pools. Above ground pools are the least expensive and will cost anywhere between $6,000 and $11,000.
After the pool has been installed, the value of the home is most likely going to increase. Increased home value means increased property taxes. There will be ancillary expenses like pool maintenance costs each month. Also, the home insurance premiums may go up. Homeowners who want to get a pool loan to install a pool must take these additional expenses into account as well before opting for pool financing.
Different Pool Loan options
Some of the most common ways to get a pool loan are listed below:
- Home equity loan: If you have equity on your house, then you can opt for a home equity pool loan. With this you can borrow a lump sum and then repay it as monthly installments. The interest rate on this kind of loan will be low as the house is used as collateral. Also, tax benefits can be availed by the borrower.
- HELOC/Home equity line of credit: People with equity on their house can opt for a home equity line of credit to borrow a pool loan. HELOC comes with a low interest rate and is tax deductible. It is a good option due to the fact that you get to borrow the exact amount needed to install the pool, and not a lump sum. Since the home is used as collateral, the disadvantage of HELOC is that the house can be foreclosed if the pool loan is not repaid. Also, there are high fees and other charges levied by the HELOC pool loan lender. A home appraisal, which is costly, will also have to be done to avail the loan.
- Personal Loans: People who do not have equity on their homes can opt for personal loans to install a pool. However, as personal loans are unsecured loans, they come with a high rate of interest. Also, as there is no collateral, the amount of money that will be distributed as pool loan will be low and dependent on your credit score. Additionally, fees, prepayment penalties, and other charges will add to the overall cost.
- Cash-out refinancing: This means that the home-owner will be consolidating the pool loan and the balance of the home loan into a new mortgage. The interest rate on cash-out refinancing is low and tax deductible. However, as there is amortization of mortgages, the borrower will be paying more as interest over the term of the loan after refinancing. Also, high fees and other charges for the refinance will add to the overall cost.
- Credit cards: A pool loan can be charged to the credit card. However, as the interest rates for credit cards are significantly high, this option is not recommended.
- Pool Loans from pool companies: Homeowners can also opt for financing by pool companies. Such pool loans can be secured or unsecured. The financing fees tend to differ from one pool company to another. Also, borrowers can avail of financing only from the company that installs the pool. Hence, homeowners should thoroughly research and scout for pool companies that offer the best pool loan rates before selecting one that fits your needs and budget.