Typically, constructing a pool can take a heavy toll on your budget. Occasionally, you may not have cash at hand when buying a pool. Nevertheless, this should not raise any worry. There are extensive pool financing options that could help you turn your backyard into a serene haven. Various financial firms provide both secured and unsecured loans. So, you can choose the most suitable method to finance a swimming pool.
Some of the loan types granted to aspiring pool owners include credit card loans, personal loans, and home equity loans. Often, all loans used to finance a swimming pool have limits. The limit depends on an individual’s credit score, financial history, among other factors. We discuss some of the best techniques to finance a swimming pool in this article.
Home Equity Loans #
This type of loan is available in most pool financing companies. Home equity loans offer a certain amount of money at a set interest. In most instances, the loan has an extended payment period that can go up to ten years. Based on the financing company, these loans can incur a deposit payment at the onset.
Advantages of home equity loans #
- Unlike a personal loan, the interest rate tends to be less.
- In case you borrow the loan to enhance your home, it can be subject to tax reduction.
Disadvantages of a home equity loan #
- Home equity loans require an asset to secure the loan. Often, your home serves as security hence the name home equity loan. So, you run the risk of your home’s foreclosure.
Cash-Out Refinancing #
In such loans, borrowers apply for another mortgage on top of the old one. Let’s try to understand this better by looking at an example. Suppose you want to construct a pool worth $40,000 and apply for a loan with your mortgage company. Your house costs $200,000, and you have completed payment of $100,000. So, this means that you still have to pay another $100,000. It is possible to refinance the mortgage with $140,000 and construct your pool with the remaining $40,000.
Cash-out refinancing loans have higher interest rates compared to other loan types. Remember, interest is not charged on the $40,000 but the $140,000. Even so, fixed interest rates apply to these loan types.
In summary #
There are many ways to finance a swimming pool. However, some of the best ways of funding your pool are cash-out refinancing and home equity loans. Although they carry some risks, they have fixed interest rates and extended payment periods. On the other hand, credit card loans and personal loans have higher interest rates and cost a lot for homeowners. Ultimately, homeowners need to choose a pool type that matches their budget.