Using A Home Improvement Loan To Install A Swimming Pool
Installing a swimming pool can be a wonderful addition to your home and lifestyle. While a pool will give your family hours of entertainment and leisure, it is not typically an excellent resale investment. But if having a pool suits your lifestyle, you may want to use a loan to cover the costs of the project. Home improvement loans may be a great way to finance the cost of a swimming pool.
Buying A New Home Special Tactics For Saving Money On Your Pool Loan
Does the new home youre buying come without the pool you want? If you are buying a home and plan to build a pool, seize the opportunity to land a better financing deal by integrating a pool loan with your home loan.
Depending on your mortgage lender and the financing options available, you may be able to bundle a pool loan with your new mortgage. Doesnt that sound better than applying for another loantypically with another lender?
Consolidating your loans may save you money. Typically, one combined monthly payment will be lower than a separate mortgage payment and a home-improvement loan payment.
Certain factors impact whether lenders will allow home-and-pool loan packaging. But for the benefits that consolidation provides, its worthwhile to inquire to see if its possible. Here are some ways that bundling your pool loan with your mortgage can pay off.
Better interest rates
Mortgage interest rates almost always run less than those for home improvement financing.
Therefore, merging your pool cost into your mortgage will almost always provide a lower interest rate on the pool portion of the loan. Over the length of the loan, you will enjoy savings on the interest.
Lower monthly payments
Whats also nice about this combined arrangement is the size of your monthly payment. It will be smaller.
Heres why: If you obtain a home improvement loan for a pool, the term will likely be 7 to 15 years maximum. However, the length of a typical mortgage is 30 years.
How We Chose The Best Pool Loans
We chose the top pool loan lenders listed above after reviewing 15 different financing companies. We evaluated each lender on its available loan amounts, interest rates, repayment terms, funding speed, and credit requirements. To be included, companies had to allow customers to borrow at least $35,000the average cost to install an in-ground swimming pool. Companies with lower loan limits were eliminated from the list.
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A Comprehensive Guide To Help You Understand Your Options For Adding Renovation Costs To Your Mortgage
Whether buying a fixer-upper or looking to remodel a current home, both homebuyers and homeowners often wonder if they can add renovation costs to their mortgage.
And on the one hand, doing this means a single loan and one monthly payment, but it doesnt come without its drawbacks.
And in this guide, well walk you through what these are from higher interest rates and the extra steps that can cause significant delays.
If youre looking for a way to combine renovation costs into your mortgage, well help you to understand your options as well as introduce you to RenoFi Loans, a new type of home renovation loan that could be the perfect solution to financing your renovation.
Specifically, were going to take a look at:
How Can You Add The Cost Of Renovating Your Home To Your Mortgage
Options do exist that allow both homebuyers and homeowners to add the cost of a home renovation project to a mortgage. These include:
Homeowners who have equity that they can tap into can refinance their mortgage to add the cost of renovations, but this will often be at a higher rate and increased monthly payments.
Its important to understand, however, that while these options are out there, it doesnt necessarily mean that theyre the best way to finance a renovation.
Homeowners and homebuyers often jump straight into looking at options that allow these costs to be added onto a mortgage for the simple reason that they havent got cash available to finance the projects they want to get started on upfront, dont have the equity thats needed to take out a home equity loan or line of credit and dont want to take out a high-interest personal loan.
That said, you need to make sure that youre considering your options carefully and go down the route thats right for you. And this means understanding how the different options impact both your borrowing power and your monthly payments.
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How Long Can Pool Loans Last
Your pool loans repayment term is dependent on the type of loan you have but ranges from two to 30 years.
- Home equity loans: If you take out a home equity loan, you can choose a loan term ranging from five to 30 years, depending on which lender you select.
- HELOCs: With a HELOC, you have a draw period followed by the repayment period. The repayment period can range from 10 to 20 years in length.
- Cash-out refinance: With cash-out refinance, you usually have 15 to 30 years to repay the loan.
- Personal loans: Personal loans tend to have shorter repayment terms since theyre unsecured. Typically, youll have two to 12 years to repay your loan.
What Types Of Loans Can Be Used To Get A Pool
When it comes to financing a new pool, there are four main types of loans:
- Home equity loan: A home equity loan, also known as a second mortgage, allows you to borrow against the equity youve built in your home. The loan amount is based on the difference between your homes current value and what you owe on your existing mortgage.
- HELOC: Like home equity loans, HELOCs enable you to tap into your homes equity to finance your swimming pool installation. But rather than getting your money in a lump sum, HELOCs are a revolving line of credit, so you can use the line of credit again and again during the draw period.
- Cash-out refinance: With a cash-out refinance loan, you replace your existing mortgage with a new one with a larger amount than you owed, getting the difference in a lump sum.
- Personal loan: Unlike the other three options, personal loans are unsecured, so you dont have to use any property as collateral. Personal loans tend to have higher interest rates than other types of financing, but you can get the money you need quickly without risking your home.
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Personal Loans Or Pool Loans
If you prefer financing a swimming pool without tapping your home equity, you might apply for an unsecured personal loan.
Banks, credit unions, and otherfinancial institutions offer personal loans, and theyre sometimes advertised as poolloans.
Once youre approved, youll receive a lump sum to pay for your swimming pool.
Pros of using a personal loan
Getting funds with a personalloan is often faster than applying for a cash-out refi, HELOC, or home equityloan.
The application process should besimpler, and in most cases, youll get funds within a few days or a week.
Also, since your housedoesnt secure the loan, the bank cant foreclosure if you stop making loanpayments .
Cons of using a personal loan
The downside is that personal loans have much higher rates compared to home equity financing. So youll end up paying more interest over the life of the loan.
To save money on your loan, always compare interest rates among different lenders. This can help you find affordable pool financing.
Swimming Pool Financing Faq
How can I find the best financing option for my family?
Our financing manager, Natalie, has been in the mortgage and loan industry for 20+ years. Her expertise is available to anyone interested in financing their Presidential Pool! When you combine Natalies experience with our huge set of financing options, you get the best financing options available for your family.
What should I look for in a loan provider?
The lending institutions that we have partnered with specialize in swimming pool financing and are good at what they do. The number one thing to keep in mind is what monthly payment is in your budget and then look at the lender that will offer the best rate and term to see if they can meet your needs. Natalie will walk you through everything from start to finish.
What is required to qualify?
Different programs have different requirements. With our secured loans the lenders minimum credit score requirement is 650+ and the unsecured loans require a 600+. There are other factors that determine qualification which can include debt to income ratio, residual monthly income, and credit history.
What types of loans are available?
We also offer unsecured loans, which are more of a personal loan, so the lender does not use the home as collateral.
What terms and rates are available?
The rates for the unsecured range from 6.99% and up depending on credit score, credit history and other factors.
How long does it take to get a loan?
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What Is A Swimming Pool Made Of
Similar to size, swimming pool material is another contributor to its cost. The price point can vary, depending on what type of material you choose.
Here are a few different types of pool materials:
For reference, a concrete pool is going to be more expensive, but it will last longer than a vinyl-lined pool, which is more economical.
Tiles can create a piece of artwork in your pool, but opting for a similar-looking liner will give the same effect, without breaking the bank.
The most important key is to work with an installation professional, suggests HomeAdvisor. This individual can work with you on pricing and create a design using less expensive materials, while keeping your desired aesthetic.
How To Finance A Pool
Many or all of the products here are from our partners. We may earn a commission from offers on this page. Its how we make money. But our editorial integrity ensures our experts opinions arent influenced by compensation. Terms may apply to offers listed on this page.
In the heat of summer, a swimming pool may seem like an ideal addition to your backyard. But paying for a pool out of pocket can be expensive.
In fact, according to HomeGuide, the average cost of an inground pool is $35,000. Most homeowners pay between $28,000 and $55,000, depending on the type, shape, and size of the pool. Covering these high costs out of pocket is difficult or impossible for the typical homeowner.
You might be wondering, “Can you finance a pool?” Yes — and there are several ways to do so. In fact, getting a pool is a great way to improve your quality of life without putting too much strain on your savings account.
Here’s how to finance a pool.
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Swimming Pool Loan Through The Dealer
Another option to finance your swimming pool may be a loan through the dealer you use to purchase it. If you do opt for dealer financing, make sure you carefully read the terms youre agreeing to, and be prepared to pay higher rates. Still, if youre not able to qualify for a personal loan or financing using your homes equity, this may be the only option for financing your swimming pool.
Who this is best for: A swimming pool loan is the best option for someone who isnt able to qualify for a home equity loan, HELOC or personal loan.
Personal Line Of Credit
A personal line of credit is a little like a tab at a restaurant. You can keep adding to it, up to a pre-established maximum.
Advantages: You can continue to reuse your line of credit after youve paid off your pool project. You only pay interest on the amount you use and the only payment youre required to make every month is the minimum payment established by the lender, which may be interest only.
Disadvantages: As an unsecured loan, youll pay higher interest rates than a secured loan or line of credit. Youll be subject to a variable interest rate, which isnt ideal if interest rates are on the rise. It can be tempting to keep spending on your line of credit, especially since banks and credit unions make them so easy to use.
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Don’t Ruin The New Yard And Driveway
We also want to avoid messing up fresh asphalt and landscaping.
After all, no one wants giant machinery tearing up the flower beds or cracking the new driveway. Your brand new house deserves to look new!
We want to try to get the pool in after there’s power to the house but before access gets cut off and before the backyard is finished.
Top Things To Consider When Financing A Renovation
You might start out thinking that you need to add renovation costs to your mortgage, but that doesnt necessarily need to be the case.
Even if you dont have sufficient equity available to take out a home equity loan or line of credit, that doesnt mean that there arent solutions that let you take out a second mortgage such as a RenoFi Loan.
And you certainly shouldnt see yourself turning to a high-interest unsecured personal loan or credit card to finance the cost of your renovation.
However, there are some things that you should be considering regardless of the type of financing you think is most suitable and base your decision upon these things.
After all, not all financing options are right for every homeowner, so its important that you consider things like:
- How much money do you need to borrow to complete your renovation?
- How much equity do you have in your home that you can tap into?
- Whats your credit score and credit history?
- Do you have any other debt on other loans and credit cards?
- What is the maximum monthly payment you can afford?
- How long do you want to repay the loan over?
Understand the options that are available for you and choose the one that lets you borrow all of the money you need at the lowest monthly cost.
For many homebuyers and homeowners, thats a RenoFi Loan.See if you’re a good fit for a RenoFi Loan.
How do I know if a RenoFi loan is right for my project?
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A Pool Is Expensive To Maintain
When youre figuring out the financing of your pool, dont forget that costs dont end once the pool builders leave your home.
Swimming pools require ongoing maintenance. That can mean big bills will keep coming for as long as youre enjoying your backyard haven. Some of the expenses pool owners have to bear include
- Pool-cleaning equipment or a cleaning service
- Water and water treatments
- A pool cover
- Heating the pool
All these expenses can add up. In fact, HomeAdvisor indicates that basic upkeep for a pool runs around $1,200 to $1,800 annually, depending on location. And after factoring in potential repairs as well as higher utility costs, keeping your pool in ideal condition could run as much as $5,000 per year.
Depending on where you live, local code may also require the installation of a secure fence around your pool. This could add thousands of dollars to your initial installation costs.
Fannie Mae Homestyle Renovation Mortgage Loan Terms
To qualify for a Fannie Mae HomeStyle Renovation mortgage, you’ll need to meet a lender’s credit standards. While Fannie Mae says owner-occupants must have a minimum credit score of 660, many lenders will require a higher credit score for an approval. Borrowers with a credit score of 740 or higher will pay the lowest mortgage rates. If you are borrowing money for the renovation of a second home or for an investment property, your credit score must be 700 or higher.
Your qualification for the mortgage will be based on the full loan amount, including both the home financing portion of the loan and the repair costs. Fannie Mae says your maximum debt-to-income ratio must be 45 percent or less, but some lenders have a lower debt-to-income ratio requirement.
Fannie Mae’s loan limits in 2014 were $417,000 for a single family dwelling in most U.S. states with Alaska and Hawaii limits at $625,500, so you won’t be able to borrow more than that on a conforming loan. However, you may qualify for a jumbo loan and carries a higher interest rate. For a jumbo loan, you’ll need a credit score of 700 or higher.
You must have a minimum down payment or home equity of five percent for a conforming loan according to Fannie Mae, but many lenders may require ten percent or more for this loan program.
The Fannie Mae HomeStyle Renovation mortgage program requires you to work with a licensed, registered contractor.
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Final Considerations When Applying For A Swimming Pool Loan
There are a few final considerations that you should keep in mind before you apply for any pool financing product:
- Monthly payment: Consider speaking with a few pool contractors to get a ballpark estimate of your final price, then play around with a pool loan calculator to see how much your monthly payment may be. If you want to pay your loan off quickly, youll need to pay more each month. If you plan to spread your payments out over the long haul instead, you may be able to pay a smaller monthly amount.
- Repayment term: If you plan on selling your house in a few years, youll likely want to avoid a long loan term. You should also know that a home with a pool may be worth slightly more but it may also appeal to a smaller group of buyers since not everyone wants a pool in their backyard.
- Maintenance costs: If you plan to stay put, youll need to consider the long-term costs of owning and operating a pool. A pool is expensive to maintain. In addition to the large upfront construction costs, youll need to add pool cleaning equipment, lighting and heating, a pool cover and other regular maintenance items into your budget.