I asked this on the Home Improvement Board, but I figured I would ask here as well. Planning on putting a pool in during this upcoming winter, and not sure the best way to finance it. The pool and landscaping improvements are going to costs around $100k. I've currently got about $200-230k in equity in the house. What day you?

If you're planning on using home equity, the only way I've heard to do it is as follows:

Most banks won't take a second lien on a house to build a pool. So the bank will issue a construction loan for the full price of your mortgage plus the price of the pool. There are a few modifiers on this method but the one I've seen is they take that construction loan and pay off your current lender, followed by paying out draws for the pool construction. Once the whole thing is complete you'll then refinance into a mortgage.

Keep in mind that your home with the pool will need to appraise for a high enough value to absorb the new loan (probably not an issue in today's environment).

Lol.

Agreed, but it is an option.

At least you're paying yourself back principal and interest. And hell. You're getting a pool.

Frost has a pretty good pool loan program. Sounds like you may have sufficient equity for a HELOC. That option has no closing costs so it's probably worth looking into.

No offense to stive but that's a costly and inefficient way to finance a pool. 99% of pool loans are 2nd liens.

I don't disagree that it's expensive. I was at lunch with a couple of bankers one day (from different banks) and I remembered them telling me how it typically worked. Seems like they said most big mortgage companies won't do pool loans and most banks don't want to be the second lien without a high interest rate and having the mortgage under their roof. So while it's an expensive approach, in today's interest environment it's probably still cheaper than paying second lien interest rates.

I'm not a banker and I haven't built a pool. Just conveying what a couple of bankers have shared with me.

FunkyKO said:

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Lol.

Agreed, but it is an option.

At least you're paying yourself back principal and interest. And hell. You're getting a pool.

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Yeah, but don't you have to pay those back in like 6 months if you leave your current job (even if the decision isn't yours)?

There is no shortage of banks willing to take 2nd lien positions at reasonable rates for pools. The scenario you described would have many thousands of dollars in borrower costs in addition to having to go through the process twice in about 6 months. I've been in mortgage and construction lending for many years and that would never be something I would suggest.

Our pool builder had a credit union they worked with so that's the route we went. Took out a standard 20 year loan with plans to pay it back in 4-5.

somewhat....they consider the loan repayment as 1099R distribution. so it would show as a distribution for the amount repaid. that's what usually happens if someone retires and they still have a loan balance. obviously those folks are normally over 59.5 so no penalty.

again, its a choice. not the choice.

op asked for ways to fund a pool. those are some ways. each have their plus and minus.

OutdoorAg said:

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I asked this on the Home Improvement Board, but I figured I would ask here as well. Planning on putting a pool in during this upcoming winter, and not sure the best way to finance it. The pool and landscaping improvements are going to costs around $100k. I've currently got about $200-230k in equity in the house. What day you?

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Finance it however you can for as long as you can. If there is coming inflation or stagflation, it will be the best decision of your life. Wealth transfers from lenders to borrowers in such times.

Cash

Why has no one suggested cash out refi with such low interest rates? No brainer!

Then you have the cash. Then you have the pool.

Premium said:

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Why has no one suggested cash out refi with such low interest rates? No brainer!

Then you have the cash. Then you have the pool.

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Exactly. No reason to pay cash at all when you can get a refinance at low rates. This isn't that hard.

Premium said:

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Why has no one suggested cash out refi with such low interest rates? No brainer!

Then you have the cash. Then you have the pool.

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Because he doesn't have enough equity to do that.

mavsfan4ever said:

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Premium said:

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Why has no one suggested cash out refi with such low interest rates? No brainer!

Then you have the cash. Then you have the pool.

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Exactly. No reason to pay cash at all when you can get a refinance at low rates. This isn't that hard.

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Selling a box is even easier to get near risk free rates right now. You just need to know how to set it up: https://www.optionseducation.org/referencelibrary/white-papers/page-assets/listed-options-box-spread-strategies-for-borrowing-or-lending-cash.aspx.

I'll stand up for outdoorag and say he has plenty of cash. Pretty sure he lives in a pretty pricey area of Houston.


As for financing. I'd pay cash and hope I could get a low rate refi afterwards. If not. Ummm then just deal with it.

A cash out is likely an option however it requires several thousand dollars in closing costs. OP is probably a savvy guy with an already good mortgage rate so by the time he figures in the significant closing costs to borrow $100K it's a costly option. I'm in mortgage and get paid to originate mortgages but it wouldn't be the first option in my opinion.

Buy a boat instead.

drill4oil78 said:

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A pool will not add much value to your house. When you sell the house you will be lucky to get 50% of the value out of a pool. Add at least $100 to your electric bill every month + $ for chemical cost.

The happiest two days of your life ... the day you get the pool and the day you get rid of it.

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You left off resurfacing every decade or so for 10 grand a pop.

Don't be dense. If someone had cash to pay for their pool, why mention home equity?

A pool does very little for home value. Why would anyone take equity out of their home to put it somewhere that doesn't help the home value?

It's a want, not a need. And doesn't make financial sense. Pay for it with cash or don't get one at all. That's my opinion.

Getcha dat pool on layaway, yo!

The opportunity cost of paying cash far exceeds the interest cost of any of the financing options.