On those hot summer days or breezy summer nights, there can be no better feeling than a refreshing swim or relaxing lounge poolside.
But for those keen to achieve this level of comfort, you must find the right swimming pool financing to make it happen.
Making your swimming pool ambitions a reality
Adding a swimming pool to your home can significantly enhance your lifestyle and increase your property’s value.
By many estimates, this translates into approximately a 7% increase in home value, which can mean a very nice boost to your home value, especially in Florida's luxury home market.
However, swimming pool financing can be a significant undertaking that requires careful consideration. Let’s look at solutions for financing swimming pools.
Are they right for you? Let’s find out as we explore which is best for your needs.
Start your application with MIDFLORIDA Credit Union.
Estimates for swimming pool costs
The average cost of an in ground pool installation in the U.S. ranges from $28,000 to $55,000, or about $50 to $125 per square foot.
- Costs vary by material:
- Concrete pools: $50,000 to $100,000
- Vinyl pools: $28,000 to $40,000
- Fiberglass pools: $28,000 to $60,000
- Above-ground pools are significantly less expensive, typically costing between $1,800 and $5,000.
Additional features can increase costs:
- Pool steps: around $1,500
- Pool enclosures: about $15,000
- Hot tub: approximately $10,000
- Pool deck: $7,500 to $17,000
Two popular options for swimming pool financing are cash out refinancing and home equity loans.
Can you use a home equity loan for a swimming pool?
Yes, using a home equity loan to finance a swimming pool is a viable option for many homeowners.
Home equity loans are frequently used for home improvement projects. These loans enable you to convert the equity you’ve built up in your home into liquid funds for investments, renovation projects, debt consolidations, and so on.
They usually have a fixed interest rate and are paid in a lump sum. This makes them an attractive option for homeowners looking to fund large projects like pool installation.
How home equity loans work
Once you receive your lump sum from the home equity loan, you’ll have to repay it over a set period with fixed monthly payments.
The loan amount is based on the equity in your home.
The basic calculation goes like this:
- Take your home’s current market value
- Look at the outstanding balance on your mortgage
- The difference is your home equity
Benefits of using a home equity loan
- Reduced interest rates: Home equity loans typically come with lower interest rates than personal loans or credit cards.
- Consistent repayment terms: Fixed interest rates and repayment terms provide predictable monthly payments, simplifying budgeting for your swimming pool project.
- Potential tax advantages: Interest paid on a home equity loan for home improvements may be tax-deductible in certain cases—but always consult a tax professional to determine specific benefits for your situation.
How cash out refinancing works
Cash out refinancing involves replacing your existing mortgage with a new one with a higher loan amount.
The difference between the old and new mortgage amounts is a lump sum, which you can use for your swimming pool project.
Benefits of cash out refinancing
- Possibility of reduced interest rates: If interest rates have decreased since your original mortgage, you may obtain a lower rate on the new mortgage, lowering your total borrowing costs.
- Simplified payment: Refinancing consolidates your debt into one mortgage payment, easing financial management.
- Larger funding access: Based on your home’s value and accumulated equity, cash out refinancing may offer more funds than a home equity loan, making it ideal for bigger projects.
Comparing home equity loans and cash out refinancing
Loan amounts
- Home equity loan: The loan amount here depends on your home’s equity, usually up to 85% of the home’s value minus the existing mortgage balance.
- Cash out refinancing: You can refinance up to 80% of your home’s value, potentially providing access to more funds if your home has appreciated significantly.
Interest rates
- Home equity loan: Fixed interest rates provide stability and predictability.
- Cash out refinancing: Interest rates can be lower if market rates have decreased since your original mortgage, potentially offering cost savings.
Repayment terms
- Home equity loan: Fixed repayment terms with consistent monthly payments.
- Cash out refinancing: Typically involves new loan terms, which can extend or shorten the repayment period, depending on your preference.
Application process
- Home equity loan: Generally faster and involves less paperwork compared to refinancing.
- Cash out refinancing: More complex and time-consuming, as it involves taking out a new mortgage.
Choosing the right option for swimming pool financing
When deciding between a home equity loan and cash out refinancing for your swimming pool project, consider the following factors:
Your current mortgage rate
If your current mortgage rate is low, a home equity loan might be more advantageous to avoid losing the favorable rate.
If rates have dropped, cash out refinancing could save you money on interest.
Your equity and home value
Assess your equity and your home’s current value. If you have significant equity, either option can work, but cash out refinancing might provide more funds for larger projects.
Financial goals and repayment preferences
Consider your financial goals and how you prefer to manage repayments. Fixed monthly payments with a home equity loan offer stability, while cash out refinancing can consolidate your debt into one payment.
Swimming pool financing: The bottom line
To achieve that dream of your own swimming pool, you must understand that financing a swimming pool project requires careful consideration of your funding options.
Both home equity loans and cash out refinancing offer unique benefits, and the right choice will factor heavily into your financial situation and goals.
Start your application with MIDFLORIDA
MIDFLORIDA provides personalized home equity solutions and refinancing options to help you achieve your dream of adding a swimming pool to your home.
Start your application with MIDFLORIDA today and take the first step towards making your backyard oasis a reality.
MIDFLORIDA Credit Union does not discriminate against credit applicants on the basis of race, color, religion, national origin, sex, marital or familial status, age (provided the applicant has the capacity to enter into a binding contract), disability, sexual orientation or gender identity; because all or part of the applicant's income derives from any public assistance program; or because the applicant has in good faith exercised any right under the Consumer Credit Protection Act. It is MIDFLORIDA’s policy to observe both the letter and the spirit of the law.
