Can you use a home equity loan for a swimming pool?
Alternative Pool Financing Options
You may be wondering about other pool financing options. You may want to consider a cash refinance, home equity line of credit (HELOC), construction loan, or personal loan to finance your pool project. Let’s look at each of these options individually.
Refinancing by collection
A cash refinance also offers another way to fund a pool with home equity. In a cash refinance, you replace your existing home loan with a new one using a loan amount greater than what you owe on your home. You can then receive the difference in cash.
Home Equity Line of Credit (HELOC)
A home equity line of credit (HELOC) can also be used to finance a swimming pool. Lenders will also consider your credit score and DTI to qualify for a HELOC. Shoot for a credit score above the mid-600s, with an ideal credit score above 700.
A HELOC works like a line of credit, similar to how credit cards work. HELOCs allow you to withdraw money from your lender on a revolving basis based on the available equity in your home.
You can withdraw the amount you need to borrow throughout a draw period. This is the main difference between a HELOC and a home equity loan, which you receive in a lump sum. Unlike home equity loans which have an interest rate that remains the same, HELOCs generally have variable interest rates, which change periodically.
At the end of your drawdown period, you can repay your loans based on an established repayment period.
Ready to build
You can use a ready to build to finance a swimming pool. A construction loan is a short-term, higher-interest loan that typically allows you to withdraw funds for about a year while your pool construction is complete. You can use it for all costs related to your home improvement project, including building permits, land, building materials, labor, appliances and more.
Just like with a regular mortgage, you will need to provide your credit score and other documents such as tax returns, W-2 forms and bank statements to your lender to prove that you can repay your loan.
It is possible to obtain a personal loan to finance a swimming pool, and those with good credit can benefit from the best rates. Personal loans are unsecured installment loans that allow you to borrow a one-time lump sum from a lender that you repay at a fixed interest rate. In order to get a personal loan, just like the other loans listed here, you will need to show your lender personal ID, proof of income, employment information, proof of residency, and other documents required that the lender would like to see.