Pool Presents: How to Finance a Home Swimming Pool
Tuesday, January 2, 2018, 6:00 PM | Leave Comment
Few luxuries of homeownership can match the satisfaction of taking an afternoon dip in your very own home swimming pool. At the same time, not everyone’s budget is built to withstand the monetary stretchy that typically accompanies building such a refreshing personal oasis.
Don’t give up on floating lazily through your next round of hazy summer days and moonlit nights quite yet, though.
With a little careful planning, you could still take advantage of several avenues to finance a home swimming pool as a Christmas gift to you and your family before the mercury rises through the roof again, even with a less-than-ideal credit history.
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Financing a Home Swimming Pool through a Bank
Interest rates and other conditions are bound to vary from one local, regional or national bank’s financing program to the next.
Become intimately familiar with each lender’s distinctive advantages and disadvantages before applying for or accepting any loan.
Repayment terms usually range between 12 and 144 months. However, longer loans are more likely to carry rates that escalate over time.
Since most banks specialize in unsecured loans, you may also be subjected to a notably longer credit review while the lender’s associates scrutinize your credit report, income sources and total assets with exceptionally thorough eyes.
For the best chance successfully financing your home swimming pool through a bank, choose an institution with whom you have an existing mortgage or checking or savings account.
Familiarity with your financial outlook, spending habits and track record of timely payments may translate to an increased openness toward offering a loan.
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Financing a Home Swimming Pool through a Credit Union
Homeowners who already belong to a member-owned credit union have the option of first collaborating with a not-for-profit organization reasonably more willing than a traditional bank to trust members with somewhat questionable credit.
Since members are also shareholders, your loan is also more likely to come with a more generous interest rate and minimal fees attached in the interest of a traditionally strong emphasis on exceptional service.
In addition to more personally accommodating loan terms, credit unions provide other banking services at jaw-dropping low costs most commercial banks cannot touch.
Most organizations limit membership to a narrow category, such as certain occupational groups including teachers, nurses and military personnel. Others abide by criteria as broad as where their members live.
None of this means your credit, income and assets will not come under microscopic scrutiny when aiming to finance a home swimming pool. However, a credit union is less likely to write a member off as an unacceptable lending risk based on just a few red flags.
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Financing a Home Swimming Pool Using a Credit Card
Using a high-limit credit card to entirely finance the building or installation of a home swimming pool is a monumentally risky idea.
Then again, footing a portion of the costs using a line of credit and other resources to shore up the balance may be a worthy strategy, provided you have plotted our a strict budget and repayment plan for the project with careful consideration for all rates and conditions.
If the market rate changes or an introductory period ends and you fail to make monthly payments on time, higher interest rates on essentially an unsecured loan could drown you.
Fortunately, you won’t have to put up your home as collateral in exchange for the funds to upgrade your backyard.
Check with your builder before using plastic to finance all or a portion of a home swimming pool.
Some contractors will accept a credit card only for the pool equipment. Others won’t accept one until the final plaster-finish phase of construction.
You may even get lucky and stumble upon an outfit that will let you swipe for the full contract amount but only if you put up the credit card processor’s merchant service fee.
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Financing a Home Swimming Pool with a Home-Equity Loan
Banks, credit unions and other financial institutions may offer home-equity loans based on the difference between your home’s market value and its owed mortgage balance.
Equity is the value of whatever portion of your home you actually own, a stake represented by all money you have already paid toward your loan.
The same lender holding your original mortgage or an entirely new institution may allow you to borrow against your home’s value, often with relatively quick approval and several added tax benefits attached to financing intended for home-improvement projects.
That being said, do beware: although still often fairly low, a home-equity loan’s interest rate may outstrip the one attached to your original mortgage.
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Financing a Home Swimming Pool with a Home-Equity Line of Credit
Unlike a similar loan, financing a home swimming pool by way of a home-equity line of credit provides the favorable borrower terms of secure financing, but going this route means taking chances with variable interest rates that may or may not fluctuate.
Your lender will limit your spending according to your ownership stake in your home and set up a monthly payment schedule within which you must repay borrowed funds.
You only pay interest on money you actually borrow, and you can draw from your credit line incrementally to receive only the exact funds you need.
This comes in especially handy as larger construction projects execute in strategic phases with payments timed accordingly.
By comparison, a home-equity loan assesses interest on the entirety of a lump payment’s outstanding funds. So, if you wanted to use a few extra bucks to procure some spa chemicals, it isn’t a huge issue.
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Financing a Home Swimming Pool Using Your Savings Account
It may not be ideal, but you can also use your personal savings account to procure a “savings secured loan” or “passbook loan” to finance your home swimming pool.
Though not exactly common, these products put up the cash in your bank or credit union savings account as collateral on a quick and simple loan that might forego a credit check entirely.
After completing the required paperwork, the lender transfers the agreed-to funds out of your savings account and into a certificate of deposit.
You can borrow absolutely no more than your given account balance. The rewards? You only pay the typically excellent interest rates with no need to reduce the principal. Plus, the terms renew indefinitely for as long as your project takes.
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Financing a Home Swimming Pool with Your 401(k)
Finally, a last resort. If every other option fails, you can always finance a home swimming pool using your 401(k) retirement savings.
On one hand, you only need to pay yourself back with monthly or quarterly payments in addition to interest at varying rates based on the prime market rate plus a percentage point or two.
After all, you are only taking away from money you paid yourself.
On the other hand, you have five years to pay back the borrowed funds in full before a 10-percent early withdrawal penalty hits you.
If you expect a major cash influx later this year or within a few years, you can likely repay your 401(k) completely without consequence.
Just be sure you know what you’re doing. After all, this is money intended to make money for you and fund the enjoyment of your golden years.
Besides, Uncle Sam doesn’t look kindly upon gaming a 401(k)’s tax exemptions so you can splish-splash the dog days away.
