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For some homeowners, having a private pool is a high priority on their wish list, especially if they live in a hot climate. However, installing a swimming pool does not come cheap. Pool loans can be expensive and can lead to long-term debt. Understanding all of the options available to finance a swimming pool will help you decide whether borrowing money is worth it and which loan is best for you.
How much does a swimming pool cost?
Before you look into financing options, you’ll need to do a little research on how much you can afford. The cost of swimming pools varies depending on the material of the pool as well as its shape and size.
Inground pools are more expensive to buy, install and maintain. The average cost of an inground pool varies from $ 28,000 to $ 55,000, which amounts to approximately $ 50 to $ 125 per square foot. This price includes the pool shell, heavy equipment, excavation, water, backfill materials, plumbing and pool equipment.
Above ground pools
Above ground pools are less expensive than in ground pools and some homeowners can do most or all of the installation themselves, saving on labor costs. The average cost of the pool kit and supplies is approximately $ 2,850 on average, with kits starting as low as $ 750. Of course, better quality pools and the addition of labor will increase the price.
Maintenance cost to consider
While pool maintenance costs are usually not factored into financing decisions, they should be considered before deciding to borrow money. Swimming pools require continuous maintenance. Some of the expenses include:
- Pool cleaning equipment (for DIY cleaning)
- Cleaning service (if you don’t want to clean the pool yourself)
- Water and water treatments (chlorine, salt or other chemicals to kill algae)
- A swimming pool cover
- Pool heating (if needed)
- Electricity (to run the pumps)
How much can you afford?
Installing a swimming pool is a huge investment, and unfortunately, it doesn’t necessarily increase the value of the home. “The only reason to install a swimming pool is that you want one and are going to live in it and enjoy it for yourself and your family for a while,” says financial planner Sarah Behr of Simplify Financial Planning. Before you apply for a loan, decide how much you want to spend and how long it will take to pay it off.
Financing options for swimming pools
Once you’ve determined how much you can afford to spend on a swimming pool, it’s time to consider the financing options generally available for swimming pools. There are four ways to finance a swimming pool:
Home equity loans
This loan is also known as the second mortgage. With a home equity loan, you get a lump sum at a fixed interest rate that you have to pay back over 10 to 15 years. The amount you get depends on your equity (the part of your house that you have paid off). Home equity loans always offer lower interest rates than personal loans, and some interest may be tax deductible. There may be fees associated with these loans, depending on the lender.
Home equity lines of credit
A Home Equity Line of Credit (HELOC) is a revolving line of credit that allows you to borrow against the equity in your home. The lender uses your home’s appraised value and other factors like credit history, debt, and income to determine your credit limit. These loans usually have variable interest rates. You must also pay for a real estate appraisal, application fees and closing fees associated with the new loan. However, HELOCs are very competitive, so be sure to compare multiple lenders to get the best rate.
Refinancing of collection
Refinancing with withdrawal involves taking out a new mortgage for more than your current mortgage outstanding balance and getting the difference in cash. This is a good option, especially if you can refinance at a lower interest rate than your current mortgage. Interest rates are generally fixed and part of the interest is tax deductible. Like HELOCs and home equity loans, there are fees associated with these loans.
Unsecured personal loans
An unsecured personal loan does not require collateral for the loan. These loans usually have higher interest rates. Banks, credit unions, credit cards, and even the pool equipment company offer unsecured loans. Qualifying for these loans can be more difficult because lenders may demand higher credit scores. The lower your credit score, the higher your interest rate will be.
Best financing options for swimming pools
“I still think a home equity line is your best option,” Behr said. “The lowest interest rate tends to be with a secured loan,” Behr said to be wary of pool companies offering your attractive interest rates for unsecured personal loans. “It’s going to look appealing because they’re trying to sell you the pool, and they want to remove any obstacles you might have as an owner.”
It’s also wise to try to reduce your debt before you take out a large loan. “Besides the mortgage, do you have student loans, car loans, things like that, where you might have to prioritize other debts before you take out a new loan for the pool,” he said. Behr explained. While there are several financing options for swimming pools, the cost of getting the private pool of your dreams shouldn’t compromise your credit score and income.
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