Congratulations on your decision to purchase a swimming pool! We understand that this is a very big decision and we are her
e every step of the way to help you understand everything pools and in this step, the financing options! If you have landed on this page having yet to sign on the dotted line, good for you for doing this imperative research, hope we can help out! So, without further ado, let’s figure out how you can pay for that brand new swimming pool!
Five types of ways to pay for your in-ground swimming pool
- HELOC (Home Equity Line of Credit)
- Unsecured Loan
- Secondary Mortgage
- Credit Card
- Cash
Home Equity Line Of Credit
Home Equity Line of Credit, or HELOC, is one of the most popular ways, if not the most popular way, that customers prefer to pay for their swimming pool. A home equity line of credit is a type of loan where the borrower uses the equity of their home as collateral. The loan amount is determined by the value of the property, versus the amount you have paid down on the mortgage. For example, if your home is appraised at $250,000.00 (meaning it’s valued at $250,000.00) and you have $175,000.00 left to pay on the mortgage, this means you have $75,000.00 worth of equity ($250,000.00 value – $175,000.00 Left on mortgage = $75,000.00 Equity). Banks will typically give out loan amounts for 70-80% of the amount of equity that you have in your home. In this case, if the bank were to give you 80% loan to value on your house, they would give you a loan for up to $60,000.00. Simply put $75,000.00 equity x 0.8 80% = $60,000.00!
The reason a HELOC is so popular is because customers can typically get lower interest rates from 3%-6% (depending on your credit score) in comparison to an unsecured loan.
There is also some flexibility associated with home equity loans, as these specific types of loans allow you to borrow as much or as little as you need. If you end up needing to add more to your loan, you can borrow more, if there is still availability, without needing to re-apply for a new loan.
The last reason why HELOC loans are so popular are because they are used like a credit card. You have a credit limit and a minimum monthly payment. As you pay down the loan, if for some reason you need to use it again, you can go back and add more to it, again, just like a credit card!
Things to consider
- You MUST have equity in your home!
- Start shopping around with your local banks or your current mortgage company for trust purposes!
- Some HELOCS may also be marketed as a “Home Remodeling Loan” or “Home Refinance Loan”
- Ask for a low entry level rate (this will save you money for the entry period of the loan!)
- Once you apply you will have a hit on your credit
- Once you apply, you can shop around for better rates for up to 2 weeks with out another credit hit!
- The better the credit score, the better your rate (check your credit for free with credit karma!)
- The lowest rates occur when your credit score is above 720
- You usually need a credit score of 670 or better to be considered for approval
Unsecured Pool Loan
An Unsecured Loan is a type of loan where the borrower does not use any of their possessions, such as their home, as collateral, and is solely based on the borrower’s credit score and debt-to-credit ratio. It is for this reason that the borrower typically has a higher interest rate with this type of loan, starting around 7% up into the high teens.
When getting an unsecured loan, we at Royal Pools and More use one of three different companies: Lyon Financial, Lightstream, and HFS Financial. These lenders are great because they are used specifically for personalized swimming pool loans. Use caution, though, as only some of these companies will lend for the entire backyard project.
Lyons Financial
There are several benefits of Lyon Financial being your lender:
- Programs can be “signature” or unsecured
- The rates will depend on the customer’s credit score but will range from 6.99% to 14.49%
- Term options for 5 to 20 years
- Four programs available for credit scores 640 and above in specific areas of the country
- Pays contractor directly, helping make your overall experience stress-free!
The Lyon Elite “Sign N’ Swim” Loans
- Loans from $50,000 to $100,000
- Low, fixed interest rates as low as +4.99% APR with Auto Pay
- Term options for 5 to 20 years
Available Nationwide
- No fees-points-processing-costs
- Virtually paperless process that’s fast, easy, and secure
- Maximum loan amount up to $100,000 (can be as low as $5,000)
- Program is offered in ALL 50 states
- Terms up to 12 years
- A minimum credit score of 680 is required in order to be considered for a loan offering (keep in mind that LightStream reviews other things for credit worthiness before making a loan offering – history of stable income, history on paying bills, investments, etc.)
- Funds can be used for ANYTHING in the backyard (new pool construction, above-ground pools, in-ground pools, spas, pool repairs, equipment, outdoor kitchens, patio furniture, landscaping, irrigation, etc.)
- No origination fees or prepayment penalty
- Gives full payment directly to borrower who then pays contractor according to payment schedule agreed upon on pool contract
HFS Financial
HFS performs “soft” credit checks when you apply for your loan so that you may know all of your loan options without impacting your credit score
- Lender will contact you within 24 hours of receiving your application
- Available in ALL 50 states
- Loans available for up to $250,000
Things to consider
- You need a credit score of 670 or better to be pre-approved
- The lowest rates occur with credit scores of 720 and better
- Rates typically start around 6.99%
Secondary Mortgage
A secondary mortgage is similar to a HELOC in that it uses your house as collateral. The difference between a HELOC and a secondary mortgage is how you receive the payments. When you are approved for a secondary mortgage, this money is given to the borrow as one lump sum and is not used like a credit card as the HELOC is.
Things to consider
- Start shopping around with your local banks or your current mortgage company for trust purposes!
- Ask for a low entry level rate (This will save you money for the entry of the loan!)
- Once you apply, you will have a hit on your credit
- Once you apply, you can shop around for better rates for up to 2 weeks without another credit hit!
- The better the credit score, the better your rate (check your credit for free with credit karma!)
- The lowest rates occur when your credit score is above 720
- You usually need a credit score of 670 or better to be considered for approval
Credit Card
Credit cards are becoming a more popular option with the savvy buyer! Most clients that use credit cards for their swimming pool purchase have very good rewards either in the form of flyer miles, double cash back, double points, etc. WARNING!!! Clients that are using credit cards usually have the cash to pay off the card immediately and gain the abundance of points! Simply put, IT’S A CREDIT CARD POINTS HACK! We have only seen clients use a credit card if they have the cash to pay it off immediately to ensure they don’t get hit by the compounding interest rate!
Things To Consider
- Most swimming pool contractors will make you pay for the merchant fees that add 2%-5% to the total
Cash
Well, cash is… cash LOL! This one is self-explanatory!
The good news is that it is 2020 and we are in a very good economy right now! No matter which way you choose to go, you will have the opportunity to get a very good rate! In fact, from what we are hearing from our clients, these may be some of the lowest rates we have ever seen when financing for a swimming pool!
Now you are armed and loaded with the knowledge to get the proper financing for your new pool! Talk to you soon!
