Financing a Pool Renovation

Very few people are in a financial position to pay for a swimming pool renovation project without borrowing money.   Therefore, a pool owner must decide how to fund the project.  Financing (or borrowing money) is a very common method of funding these types of projects.  The two most popular types of loans that are available are:

1. home improvement loan
2. home equity loan

Common to both types of loan

1. Both home improvement and home equity loans are usually available for the long term.  Thelength of time available is usually based on the dollar amount.
2. The interest is tax-deductible in most cases—see your accountant to see if this applies to your situation.
3. State law requires that a minimum of 15 days pass before the loan is funded (12 days to close the loan plus 3 day right to cancel the transaction).

Home improvement loans

Often times, home improvement loans can be made for up to 100% of the appraised value of the home.  The improvements being made can be added into the value of the home.  In addition, in the event that you decide at a later time that you decide to refinance your mortgage, the loan can be rolled into the permanent mortgage.

Home equity loans

Home equity loans can be made for up to 80% of the appraised value of the home.  The improvements being made cannot be added into the value of the home.  The combination of both of these statements make it necessary that you have more equity for this type of loan versus a home improvement loan.  This type of loan cannot be rolled into a permanent mortgage in case of refinancing.  In addition, you are only able to apply for one home equity loan in a 12-month period.

As you can see, each loan has its advantages and disadvantages.  It is important to discuss with your CPA, financial adviser, or loan officer to determine which loan would work best in your situation.    

By selecting the right contractor and financing plan, you will be ready to start the swim season next spring with a renovated pool that should provide many more years of enjoyment.