As an aspiring pool owner, it is possible to get intimidated by the enormous cost of pool construction. Even so, many pool financing companies are willing to make your dreams a reality. Undoubtedly, pool installation is expensive and can go up to $50000 depending on the pool type. There are various factors to consider before settling for a pool lending company. Remember that you have to choose the best option that meets all your needs and works alongside your budget.
The majority of the population barely has sufficient savings for emergencies, so saving for a pool may be the last option in your mind. Consequently, most homeowners borrow funds to take care of pool construction and maintenance costs, including filtration systems. Below are some of the major types of loans you can obtain from pool financing companies.
These types of loans are borrowed against an individual’s home equity. Your home equity relies on the total amount you’ve already paid for your mortgage and your house’s worth. For instance, let’s say your house costs you $235000, and you’ve managed to spend $65000; thus, your remaining balance is $170000. Considering that your house’s present value is $250000, you will subtract the current house value from the remaining mortgage amount to calculate your home equity. Thus, your home equity will be $80000.
With a home equity loan, you can only borrow a maximum of 85% of your home equity. As seen in the illustration above, where your home equity is $80000, you can get a maximum loan of $68000. Besides, such types of loans allow you to take up to $150000 with a maximum term for 20 years. Pool financing companies offer such a large amount because the loan carries less risk. However, considering your house serves as collateral, your house is at risk for foreclosure.
Besides home equity loans, personal loans are also an excellent alternative for financing your pool. Unlike home equity loans, personal loans do not need you to let your house serve as collateral. With this loan type, you liaise with banks or financial institutions to obtain the finances you need for the pool building process. Nonetheless, personal loans carry several disadvantages. Even though they do not need any collateral, they have high-interest rates compared to other loans since the lender experiences high risk.
Moreover, when your credit score is low, obtaining a personal loan could significantly increase your pool construction costs. For instance, if you request for a personal loan of $48354 for in-ground pool construction. Upon approval, your pool financing company gives you a loan term of five years at a rate of 4.98%; you’ll spend a total of $6396, specifically in interest charges. On the other hand, if your loan had a 35.99% interest rate due to low credit scores, you would pay an extra $56458 on top of the pool loan. That way, your investment will eventually be more than pool construction costs.
Therefore, if you desire to construct a pool, conduct thorough research to obtain the best personal loan offer. Identify the rates, loan terms, and conditions of different personal loans before you settle on one pool lender.
Resolving to apply for a swimming pool loan is a risky choice, and it’s essential to evaluate and assess your decision carefully. Keep in mind that pool loans carry many risks. However, there are several circumstances where taking a pool loan makes sense.
If you are a pool owner and your pool needs to meet specific requirements regulated by the state, it is better to opt for a pool loan instead of paying massive fines and penalties.
Additionally, suppose you’re putting up your house for sale in an area where 99% of homes have swimming pools. It might not be a bad idea to borrow a loan for pool construction before selling your house. But make sure you calculate and compare the expenses that come with a mortgage and the selling price. Also, examine your house value and selling price with the others around the area and decide if taking a pool loan will pay off.
Some homeowners think that installing a pool would increase their home value. Based on HouseLogic, the maximum amount you can attain from pool construction is 7%. Let’s say your house was worth $250000. After a pool installation, your home value would go up by a maximum of $17500. Compared to the total pool building and maintenance costs, this will not generate any ROI. Also, do not forget how pool maintenance is expensive due to filtration and heating systems and the frequent revamps needed. Nonetheless, if you desire a pool in your backyard, saving up might be better than requesting a pool loan from a reliable pool financing company.