The Cost Of Installing An Indoor Pool (2024)

There are several options for financing a pool, including personal loans, home equity loans, cash-out refinancing, home equity lines of credit (HELOC), and pool manufacturer financing. The best option for you will depend on factors such as your available home equity, risk tolerance, and overall financial situation. Personal loans are often unsecured, meaning you don't need to put up collateral like your house, but they typically come with higher interest rates and lower loan amounts. Home equity loans and HELOCs, on the other hand, use your home as collateral, which can result in lower interest rates and higher loan amounts. Pool manufacturer financing is another option, where you work directly with pool manufacturers or authorized dealers, but you may be limited in your choices and end up with higher overall costs.

Personal loans

However, personal loans for swimming pools may have higher interest rates than home equity financing options. Additionally, they may not be suitable for pools costing over $100,000. Short repayment terms can also result in larger monthly payments.

Before applying for a personal loan, it's important to shop around and compare interest rates and terms from multiple lenders. You should also consider the long-term costs of pool ownership, such as maintenance, electricity, and insurance.

Home equity loans

Pros of Home Equity Loans for Swimming Pools

• Fixed Interest Rates: Home equity loans typically come with fixed interest rates, which means your interest rate and monthly payments will remain stable throughout the loan term. This predictability can make budgeting easier.
• Lower Interest Rates: Home equity loans often offer lower interest rates compared to other loan options, such as personal loans. This can result in significant savings over the life of the loan.
• Tax Benefits: The interest paid on a home equity loan may be tax-deductible if it is used for home improvements, according to the IRS. This can further reduce the overall cost of the loan.
• Higher Loan Amounts: Home equity loans usually allow you to borrow a larger sum of money compared to other loan options, making them suitable for financing more expensive projects like swimming pools.

Cons of Home Equity Loans for Swimming Pools

• Risk of Foreclosure: Since your home serves as collateral for the loan, failing to make payments on a home equity loan could result in foreclosure. This is a serious risk to consider before taking out this type of loan.
• Closing Costs: Home equity loans typically come with closing costs, which can range from 2% to 5% of the total loan amount. These additional fees can add a significant amount to the overall cost of the loan.
• Delayed Installation: The approval process for a home equity loan may include underwriting and an appraisal, which can delay the start of your swimming pool installation project.
• Impact on Primary Mortgage: Taking out a home equity loan increases your overall mortgage balance and creates a second mortgage. This could impact your ability to refinance your primary mortgage in the future.

When to Choose a Home Equity Loan for a Swimming Pool

A home equity loan may be a good option for financing a swimming pool if you have a significant amount of home equity and prefer the stability of fixed interest rates and payments. It is important to carefully consider your financial situation and ensure that you can comfortably make the monthly payments to avoid the risk of foreclosure.

Cash-out refinancing

A cash-out refinance involves taking a new loan that is larger than your current mortgage. The new loan is used to pay off the existing mortgage, and the remaining amount is given to you in a lump-sum payment. You can then use this money to build your pool.

For example, if your home is worth $250,000 and you still owe $150,000, you have $100,000 in home equity. You could take out a new loan for $200,000, pay off the old loan, and receive a check for $50,000 at closing (not including closing costs).

Pros of Cash-Out Refinancing

• You can borrow up to 80% of your home's equity, which could be plenty to finance a new swimming pool at relatively low-interest rates.
• You may be able to get a lower interest rate on your primary mortgage, reducing your monthly payments.
• You can use the funds for any purpose, including debt consolidation, home improvements, or education.
• If you use the funds for home improvements, you may be able to deduct the interest on your federal tax return.
• It is a good option if you want to refinance your mortgage and borrow money at the same time.

Cons of Cash-Out Refinancing

• You will need to go through the mortgage application and approval process again, and your credit score must be high enough to qualify.
• There are closing costs involved, typically ranging from 2% to 5% of the loan amount.
• Your mortgage balance and monthly payments will increase, and failing to repay the loan could result in foreclosure.
• Interest rates may be higher than your previous mortgage, especially if rates have risen since you bought your home.

Alternatives to Cash-Out Refinancing

If a cash-out refinance doesn't work for you, there are a few other options to consider:

• Home Equity Line of Credit (HELOC): This gives you access to a revolving line of credit secured by your home's equity. You can borrow as needed and make interest-only payments during the initial draw period, usually the first 10 years.
• Home Equity Loan: This is a second mortgage that allows you to borrow a lump sum of cash against your home's value. It often has a fixed interest rate and repayment term.
• Personal Loan: A personal loan is a shorter-term, unsecured loan with a fixed interest rate and repayment period. It usually requires less paperwork and can be approved and funded quickly.
• Reverse Mortgage: If you are 62 or older, you can withdraw cash from your home's equity without having to repay it as long as you live in and maintain the home.

Key Considerations

When deciding how to finance your pool, it is important to consider the following:

• Monthly payments: Ensure that you can afford the monthly payments over the life of the loan.
• Return on investment: Consider whether the cost of the pool is worth the potential benefits, as the return on investment may not be as high as expected.
• Interest rates: Compare interest rates from different lenders to get the best deal and keep your overall costs down.
• Maintenance and upkeep: Keep in mind the ongoing maintenance and upkeep costs of owning a pool, which can add to the overall expense.

Home equity lines of credit (HELOC)

A home equity line of credit (HELOC) is a second mortgage that gives you access to cash based on the value of your home. It allows you to borrow against your home equity, which is the value of your home minus the amount you owe on the primary mortgage.

HELOCs typically have a draw period of 10 years, during which you can borrow money as needed and make interest-only payments. After the draw period, the repayment period begins, which typically lasts for 20 years. During this time, you can no longer borrow money and must make principal and interest payments.

The interest rate on a HELOC is usually variable and calculated based on an index, such as the U.S. Prime Rate, and a margin set by the lender. This means that your interest rate can change from month to month, depending on market conditions. However, some lenders may offer a fixed-rate option, allowing you to lock in your interest rate.

The amount you can borrow with a HELOC depends on the value of your home, the percentage of that value the lender allows you to borrow (usually up to 85%), and how much you owe on your mortgage. Most lenders require a minimum credit score of 620 and a debt-to-income ratio of no more than 40%.

A HELOC can be a good option if you need access to a flexible line of credit for expenses such as home renovations or unexpected costs. The interest rates are typically lower than those of credit cards or personal loans. Additionally, the interest may be tax-deductible if you use the funds for certain purposes, such as home improvements.

However, there are also risks associated with HELOCs. If you cannot make your payments, you could lose your home. Variable interest rates can also make it difficult to predict your monthly payments, and closing costs and annual fees can add to the overall cost of the loan.

When considering a HELOC, it is important to shop around and compare offers from multiple lenders to find the best rates and terms for your needs.

Swimming pool loans

Building a home swimming pool is expensive. A typical in-ground pool costs between $40,000 and $50,000, while a high-end luxury pool can set you back up to $150,000. If you don't have that kind of money lying around, you can take out a loan to finance the construction.

A pool loan provides a lump sum of cash that you can use to pay for installing the pool, leaving you with smaller monthly payments that you can make over several years. While banks, credit unions, online lenders and peer-to-peer platforms offer personal loans that can be used for this purpose, some online lenders like LightStream have specific loans for pools. These are great if you need the money quickly, usually within a few business days.

Types of Pool Loans

There are two main types of pool loans: secured and unsecured. A secured loan requires you to put up some form of collateral, such as your home or car, which the lender can seize if you default on the loan. An unsecured loan, on the other hand, does not require any collateral, making it a more attractive option for those who don't want to risk losing their assets.

Where to Get a Pool Loan

• Discover: Best for home equity loans. Discover allows you to borrow against 90% of your home equity, with loan amounts ranging from $35,000 to $300,000. They don't charge application, origination, appraisal or closing fees, making it one of the most affordable options. However, it can take over 30 days to receive the funds.
• Upstart: Best for bad credit. Upstart is a peer-to-peer lending platform that connects borrowers directly with lenders. You don't need good credit or any credit at all to qualify, and they offer a quick application process with funding available in one business day. Loan amounts range from $1,000 to $50,000, with repayment terms of three or five years.
• LightStream: Best for low-interest rates. LightStream offers competitive interest rates with a straightforward online application process. Their interest rates are lower than most other lenders, with amounts ranging from $5,000 to $100,000 and repayment terms of two to 12 years. They don't charge origination, prepayment or late payment fees.
• Navy Federal Credit Union: Best for veterans. The Navy Federal Credit Union offers low-interest rates for secured personal loans and affordable rates for unsecured home improvement loans. The savings secured loan uses your savings account as collateral, with amounts starting as low as $250. They also offer an unsecured home improvement loan with a minimum loan amount of $25,000.
• SoFi: Best for large pool loans. SoFi offers personal loans of up to $100,000, making it a good choice for those looking to build a high-end luxury pool. They offer terms of two to seven years, with a fixed interest rate depending on your creditworthiness and loan terms. You can pre-qualify in 60 seconds and get funding on the same day if your application is approved.

Things to Consider

When choosing a pool loan, it's important to compare interest rates, lending terms and fees from different lenders. Pick a loan with manageable fees and rates based on your monthly income to avoid defaulting on the loan. Also, consider the lender's terms, such as prepayment penalties, late payment charges, co-signer options, maximum loan amounts and prepayment duration. A loan with more flexible terms will be easier on your finances.

Additionally, make sure to choose a reputable pool builder who understands the legal and environmental requirements of installing a pool. Get multiple quotes and create a detailed plan for your pool, including any extra features you want, to ensure you get an accurate estimate.

Frequently asked questions