Pool construction can cost a fortune due to installation and equipment costs, among other expenses. At present, you could incur thousands of dollars when building a pool. There are many techniques used to finance pool construction, but the most common one is getting a swimming pool loan. Suppose you plan on taking a pool loan, it’s essential to adopt the right approach to secure the loan. Besides, there are a few options to take into consideration to determine the ideal manner of financing pool construction.
Various pool construction companies have partnered with financing firms to provide you with a swimming pool loan. Your pool contractor can, therefore, help you obtain the credit you require.
As a pool owner, it is much safer to adopt in-house financing because your contractor is familiar with the financing company. Moreover, most building companies only collaborate with financing companies that offer reasonable amounts for pool construction.
Conversely, using in-house financing might not be a good option at times. There are great pool builders who do not provide funding in-house, and this does not make them incompetent. Thus, you may not want to limit your options to only those who can help you acquire a pool loan.
How do you start? Suppose your pool builder offers you a pool loan, note that you are not assured of the best interest rates. Ensure you explore your options and find the financing company that will meet your financial needs.
One option of getting a swimming pool loan is through a home equity loan. If your house is worth more than the desired loan, taking a loan from your house value and letting it serve as collateral is an option.
Typically, you can borrow a total of 80% of your home value. For instance, if your house costs $300,000, and your mortgage $200,000, financing companies will allow you to borrow an extra $40,000 to $55,000. On the other hand, some lending companies enable pool owners to acquire a total of 90% or 95% of their home value. However, in such cases, the interest rates are generally unfavorable.
There are two significant benefits of borrowing against home equity. First, interest rates will be favorable compared to other lending sources like credit cards. Second, the returns on your loan are tax-free, mainly when the funds’ purpose is to enhance your home, and your total mortgage is not more than $750,000.
Nonetheless, several disadvantages accompany this financing method. Remember that your house serves as collateral, and if you fail to repay the loan, you give up your home. Additionally, if the money granted to you was a lot, your house will hardly have any equity. As a result, you can encounter difficulties when trying to sell it.
Usually, swimming pools do not generate a substantial ROI. Thus, before you take a swimming pool loan, keep in mind that you may never recover the money you invested in the pool, even if you decide to sell your house. This aggravates the risk attached to a pool loan. After construction of the pool, there could be a financial burden owing more than the house value.
Using a personal loan to pay for your pool is another alternative you might consider. Financial institutions, like banks, credit corporations, and online lenders, grant personal loans. Most of these organizations do not need to know the particular purpose of the loan, although there are personal loans specifically for pools. Consequently, once you settle for this alternative, you have a broad spectrum of institutions to choose from. Thus, you can get the best interest rates.
Usually, most financial institutions will grant you a personal loan of a maximum of $50,000. Nevertheless, some lenders give as much as $100,000 based on your credit and earnings. If you want a unique and classy pool design, you should easily qualify for a jumbo pool loan. All you have to do is ensure you have consistent earnings, high credit, and little to no debt.
Credit card loans have much higher interest rates than personal loans. Personal loans have specific payment periods, thus enabling you to plan yourself. Unlike home equity loans, they do not carry high risks since there is no collateral. Investment accounts or banks secure them. Ensure you do not risk your home with a personal loan.
Home equity loans are a good option if you have a high home value and looking for ways to reduce interest rates and tax cuts. But be sure that you manage to pay it back; otherwise, you might end up homeless. All in all, a personal loan may be the best approach to obtain a pool loan. Through this lending alternative, a qualified borrower can secure a suitable investment at reasonable rates. Even so, ensure you take a swimming pool loan that matches your earnings and financial capacity. Ultimately, analyze whether constructing a pool is a good investment for you and your family.