Money Management
Ready to Swim? A Look at Your Options for Getting a Pool Loan
Is there anything better than a dip in the pool on a hot summer’s day? Today having a swimming pool on your property may seem like a luxury fit for only the “1%” among us. However there are actually a number of loan options available for average homeowners to finance their pool projects.
Home Equity Pool Loans
Since adding a pool to your property will add value to your home, doing so often counts as a home improvement. Because of this the most common practices for financing a pool are to take out a second mortgage or home equity line of credit (HELOC). Both of these types of loans borrow from the value found in your home or property.
Just like with your first mortgage, second mortgages can have terms as long as 30 years and must be paid off if you sell your home. Though you and your guests may be looking to relax and splash around in the water, being “under water” is an entirely different thing when it comes to mortgages. Unfortunately some people may owe more money on their homes than they are now worth due to changes in the market. In these situations a second mortgage may not be an option or could cost a significant amount in extra interest.
Home equity lines of credit, known as HELOCs, also utilize your home’s equity. However, unlike second mortgages that are paid back in installments, HELOCs’ revolving credit structure is actually more like a credit card. If you’ll be able to pay off your pool relatively quickly, this may be a better option versus a long-term second mortgage.
Personal Loans for Swimming Pools
Another route for securing a loan for a swimming pool is to take out a personal loan. These loans typically have terms shorter than that of most mortgages and will not tie-up your home’s equity. The problem is that many big banks have scaled back their personal loan operations since the banking crisis of 2008.
Luckily many alternative lenders have stepped up to fill the need for personal loans. Many of these companies operate online only which often allows them to offer lower rates than traditional banks. Homeowners now have a number of online choices, including Lending Club, Upgrade, and Avant, among others. They facilitate these loans by matching up borrowers with investors, which is known as peer to peer lending. Not only are these loans fulfilled quickly, but they also have a fixed rate terms up to five years, and no prepayment penalties. SuperMoney offers a convenient tool for comparing personal loans that can be used for swimming pools and spas.
Conclusion
If you’re like most Americans you’ll need to secure financing in order to build the swimming pool you and your family have been dreaming of. When it comes to getting a pool loan, there are several options each with their own pros and cons. Ultimately, it’s best to shop around and find the loan product that works best for you so you can take it easy and relax by the pool this summer.
