from OneMain Financial
OneMain Financial: What Is the Best Way to Finance a New Swimming Pool?
NEW YORK, NY / ACCESSWIRE / March 11, 2024 / Homeowners considering adding a swimming pool to their property know they may be taking on quite an expensive project. According to recent data collected by HomeGuide, the cost of installing an inground pool can range between $46,500 and $66,500, while above ground pool installation can run anywhere from $3,500 to $6,000.
Since a majority of homeowners don't have that much cash on hand, they may have to look for a way to receive financing. Here are a few of the most common ways to do this.
How to Finance the Purchase of a Pool
There are four main ways homeowners can get the pool financing they need.
Home Equity Loan
A home equity loan requires a homeowner to leverage the equity in their home, i.e., the portion of the home's value that they don't owe to the lender, in order to receive a lump sum of money. These funds can then be used for any number of purposes, including the installation of a swimming pool.
With a home equity loan, the borrower's home serves as collateral to secure the loan. Collateral is something of value that the lender can seize if the borrower defaults on their loan payments.
Home equity loans are fairly common and relatively straightforward. Interest is applied to the principal, and the homeowner makes fixed monthly payments over the next 5 to 20 years.
HELOC
A HELOC is a "home equity line of credit." Similar to a home equity loan, this loan requires the homeowner to use their property as collateral to borrow the needed money.
However, a HELOC is structured differently than a home equity loan. Instead of receiving a lump sum payment, this borrower has access to a line of credit. The borrower may then use as much or as little of the line of credit as needed to pay the swimming pool installation expenses.
For some homeowners, a HELOC may be better than a home equity loan because the borrower pays interest only on the money that's used rather than accessing the entire available amount from day one.
Cash-Out Mortgage Refinance
Another strategy that homeowners often use is to finance upcoming major purchases like swimming pools with a cash-out mortgage refinance. This happens when the homeowner refinances their home mortgage for a greater amount than what they owe. The difference will then be "cashed out" in the form of a check that the homeowner can use as they please.
The strategy works best when interest rates are low, but can be detrimental when rates are high. It is also important to keep in mind that since cash out refinancing replaces the homeowner's current mortgage with a new, larger loan, all the borrowed money is subject to the new interest rate for the life of the new loan.
Get a Pool Loan
For homeowners who would rather not leverage their home as collateral to secure a loan, another alternative is to apply for a personal loan to obtain pool financing. The borrowed amount can be repaid over the life of the loan, typically 2 to 5 years, with a fixed interest rate. Oftentimes, a personal loan may offer a better rate and repayment terms than those associated with credit cards.
Personal loans come in two forms: secured and unsecured. A secured loan may allow for higher borrowing amounts and lower Annual Percentage Rates (APRs), but they require that the borrower pledge collateral such as their vehicle or home. An unsecured loan means the borrower does not need to pledge collateral.
The Bottom Line
Homeowners exploring financing options for a new pool have a variety of choices available. Options like home equity loans, HELOCs, or cash-out refinancing allow them to leverage their home's equity, while a personal loan offers flexibility with or without collateral requirements. By assessing their financial situation and preferences, homeowners can select the financing solution that best suits their needs and goals.
Source: https://www.forbes.com/home-improvement/pool/inground-pool-cost
https://homeguide.com/costs/cost-to-build-a-pool
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Sonakshi Murze
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sonakshi.murze@iquanti.com
SOURCE: OneMain Financial
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