Pool Loans
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The Cost of Your Pool
Thinking of installing a pool at your personal residence? Depending on where you live and how you plan to finance, it’s bound to be an expensive endeavor.
With the average in-ground pool costing $48,220 to install, most people don’t have the cash on hand to make it happen, so they turn to financing. There are many different ways to get a pool loan, with pros and cons for each method.
Before you can start to evaluate your financing options, you need to get an idea of what your pool will cost. There are several different models, each with their own longevity expectations and price points.
Jason Vaughan, president of National Pools of Roanoke, a Roanoke, Va.-based pool retailer, let us in on the pros and cons of each model.
Pool types and costs
| Type of pool | Estimated cost |
|---|---|
| Above-ground | $5,000-$10,000 |
| Vinyl | $35,000-$50,000 |
| Fiberglass | $45,000-$85,000 |
| Concrete | $50,000-$100,000 |
Above-ground
Above-ground pools are going to be your cheapest option. Vaughan describes them as disposable as they are easy to put in and take out.
He says the price typically falls under $10,000, and that depending on how many bells and whistles the customer wants, you can install one for as little as $5,000. If the manufacturer supplies an installation kit and you feel confident in your DIY skills, you should be able to cut costs even further.
Vinyl
In-ground vinyl pools are a step up from above-ground pools. While they use the same lining, they’re a more permanent structure usually accompanied by some type of deck or patio.
Vaughan notes that while they are only the second most expensive option, they may be the most practical depending on your climate.
“In northern markets you have shorter time frames between freeze and thaw,” he explained. “Vinyl is not as adversely affected by some of the effects of cold like concrete is. It’s a bigger market than concrete for many homeowners — especially up north.”
The major negative to this type of pool is that you will have to take care not to puncture the pre-manufactured lining. Vaughan says that when properly cared for, you can expect the lining to last for the duration of your homeownership — but not much longer.
According to HomeAdvisor.com, you can expect to pay $35,000 to $50,000 for a vinyl pool — including installation. Price will vary based on your individual project requirements and where you are located.
Fiberglass
Fiberglass pools are another pre-manufactured product. You pay more for the materials, but installation is not as labor intensive. Compared with a one- to two-month installation period for in-ground vinyl pools, you can conceivably get a fiberglass pool installed in as little as two weeks. You can also expect your fiberglass pool to last longer than one with vinyl lining.
Depending on your location, you can expect to spend $45,000-$85,000 on a fiberglass pool, including installation services.
Concrete
In-ground vinyl pools are a step up from above-ground pools. While they use the same lining, they’re a more permanent structure usually accompanied by some type of deck or patio.
Concrete pools are the most luxurious option, though as noted above, they may not be the best option for homeowners in colder climates thanks to freeze/thaw cycles. Concrete pools are customizable, and often take two to three months to build. If you want a waterfall feature or a vanishing edge, concrete is the way to go.
They do come at a much steeper cost, though. Vaughan, who works primarily with concrete, puts the low end at $35,000 before installation regionally, though he has worked on projects that ranged at half a million dollars and above.
Nationally, you can expect to pay anywhere between $50,000 and $100,000, including installation depending on your project specifications and location.
“You really have to look at it as a project cost, not a pool cost,” said Vaughan. “The project cost is usually about double the pool cost.”
That means if you’re putting in a $10,000 above-ground pool, you should budget for a total of $20,000. If you’re putting in a $35,000 concrete pool, your total costs are likely to be at least $70,000.
While you’re unlikely to recoup your total investment upon selling your home, a joint report by the National Association of Realtors and National Association of Landscape Professionals reveals that you are likely to recover 50% of those costs — meaning that a pool will add value to your home, just not as much value as you put into it.
Another added cost to consider is increased property taxes. When your home value rises, your property taxes do, too. It may be wise to talk to a realty professional about potential reappraisals to get an idea of how your locality would tax your home based on your aquatic addition.
Beyond ancillary project costs, you’ll also want to think about ongoing maintenance. Vaughan says that you can expect to spend about $50/month on chemicals, but your costs will go up if you want to hire someone else to take care of the maintenance.
“Major [or warmer] markets have more competition,” Vaughan said. “If there aren’t as many pools in the marketplace, hiring someone for maintenance is more expensive. Customers can spend $50 to $400 per month depending on which market they live in.”
Before installing a pool, you will also want to call up your insurance company to see how the addition will affect your homeowners policy premiums.
Ancillary Costs
As you install your pool, there will be additional costs to getting the project done. These costs include:
- Excavation of soil
- Landscaping
- Installation
- Construction of deck or patio
- Federally-mandated barrier or fencing
Ways to get a loan for a new pool
There are many different ways to secure swimming pool financing. While you won’t necessarily find a product labeled “pool loan” on your lender’s website, there are a litany of financial products which can get you the money you need to install your family’s warm-weather oasis.
Chris Blakely, CFP based in Pennsylvania, recommends these products in a very specific order.
If you have equity in your home, you can consider taking out a home equity line of credit (HELOC). Think of it as a credit card with dramatically lower interest rates. Your financial institution will tell you how much you can borrow relative to your debt-to-income ratio, credit rating and the equity you have built in your home, and you can then draw money against that line of credit when you need it.
Blakely likes this option because you can borrow the exact amount you need as the bills for supplies and labor come in, and the interest you pay on a HELOC is typically tax-deductible. According to Michael Kitces, MTAX and creator of Nerd’s Eye View, this will continue to be true under the new tax law as long as the borrowed money is used to acquire, build or improve your primary residence. However, because this deduction will now max out at $750,000 of indebtedness, it is wise to sit down with an accountant before placing your bets on tax deductibility.
Blakely does caution against the down sides, too.
“Because the home is the collateral on a HELOC, you will have to have a home appraisal done — which is a sizeable expense,” he said. “You’ll also have to look at whatever the lender’s fees are for processing the HELOC, closing costs, points, etc. These are typical fees associated with bank lending.”
Interest rates on this product are low because your home is the collateral. The downside to that if you fail to repay the loan is you could be facing foreclosure.
Home equity loans are similar to HELOCs in that they are based on your debt-to-income ratio, credit rating and home equity. The difference is that you will be borrowing a lump sum of money upfront and then repay the balance as an installment loan.
Home equity loans are a good option for pool loans for a few reasons. First, because your home is collateral, your interest rates are likely going to be lower than unsecured loans with no collateral. Blakely emphasizes that you should make sure the interest rate on your loan is fixed so that it stays steady over the course of your loan term — which he says should be 10 to 15 years.
Because the structure of your loan doesn’t matter, Kitces says the interest that you pay on these loans will continue to be tax-deductible if they are used for the building, acquisition or improvement of your primary residence up to $750,000 — just like with a HELOC.
You will have to pay closing costs on your second mortgage, so be sure to familiarize yourself with what those costs will be before taking on the loan.
If you have equity in your home, Blakely recommends a cash-out refinance as the third best option for your pool loan. With a cash-out refinance, you’re essentially taking out a new mortgage. You’ll be consolidating two expenses into the new mortgage: your current mortgage balance and the cost of your new pool.
The pros to this method are that your interest rates are likely to be lower than unsecured options like personal loans or credit cards, and the interest that you do pay is likely to be tax-deductible.
Depending on when you took out your original mortgage, your interest rate on a cash-out refinance may be lower than what you’re paying now. Blakely notes that this doesn’t mean you’ll be paying less money long term. Because mortgages are amortized, you pay more in interest than in principal at the outset. If you’re 10 years into a 30-year mortgage when you refinance, you’ll be paying less toward the equity in your home during the next 10 years than if you had not refinanced. You will also be paying interest for 10 years longer than if you did not refinance, which is likely to make your overall costs higher.
Because you’re refinancing your mortgage along with financing your pool, fees and expenses are higher with a cash-out refinance than they are with a HELOC or home equity loan.
Personal loans are unsecured debt, which means there is no collateral backing your word that you’ll pay the money back. For this reason, when you use a personal loan for a pool loan, your lender is likely to offer you a higher interest rate than the products which use your home as collateral. Again, Blakely reminds consumers to look for fixed-interest products rather than those with variable rates.
Blakely does say that personal loans are one of the better options if you have no equity in your home to leverage a cash-out refinance, home equity loan or HELOC. However, with the average pool costing between $50,000 and $60,000, he says the amount your lender offers you on a personal loan may not entirely cover the costs of the project.
If you must use a personal loan as a pool loan, make sure to calculate expenses like application or origination fees into the total. You also want to make sure there are no prepayment penalties that would prevent you from paying the higher-interest loan off before the end of your loan term.
Some pool installation companies offer financing directly to consumers, though Vaughan says that he has seen more consumers use HELOCs and home equity loans over the course of his career.
The financing options may be secured or unsecured, and while fees can vary from company to company, it’s unlikely that you’ll be able to refinance with a company other than the one who is installing your pool.
For that reason, you should compare this financing option against HELOCs, home equity loans, cash-out refinancing and personal loans rather than comparing the financing installation company by installation company. Who installs your pool should be a choice based on reputation and credentials rather than financing options or availability.
Credit cards, which come with high interest rates and confusing formulas behind minimum monthly payments, are a no-go, according to Blakely.
“If this turns out to be your only option as the other options aren’t viable for you due to debt constraints or credit issues, just splurge for a weekend at your local Holiday Inn and hang out by the pool,” he said. “Interest rates are way too high on credit cards. You’ll end up underwater or drowning in debt.”
Will a pool increase my home's value?
Blakely says that when he lived and worked in sunny Florida, he saw clients get a higher return on pool installations than he does now in Pennsylvania — home of cold and blustery winters. In this colder climate, he says his clients only see about half of their investment back when they go to sell.
Vaughan confirms that in warmer climates where half or more of the neighborhood has a pool, you’re more likely to recoup a larger portion of your costs.
Ultimately, because pools are a lot of maintenance, can pose safety concerns, and can up regular bills like your homeowner’s insurance, Blakely doesn’t recommend putting one in as an investment for resale — at least not in colder climates.
“If I were talking to a client,” he said, “I’d tell them that if you’re going to put a pool in, put it in for yourself and your family, knowing that you’re not likely to see that money back when you sell.”