Pool buyers looking for alternative financing

November 4, 12:15 PMTampa Swimming Pools ExaminerJim Michel

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Financing a pool used to be a fairly routine procedure. One could use their equity credit line or take out a second mortgage using the equity in their home to cover the cost of the pool.

The collapse of the housing market has effectively eliminated these avenues for most homeowners and caused many to put their desire for a pool on hold. Even if the homeowner does have some equity in their home; lending institutions have tightened up their guidelines to the point where getting a second mortgage is difficult and the amount offered will not cover the entire cost of the pool. In some cases; banks have lowered the amount which can be borrowed down to 70% of the total value of the home.

Some lenders have tried to address the issue by offering creative financing for pool construction. Requirements to qualify for these loans are far more stringent than those formerly used for second mortgage lending. Applicants must have a credit score of 700 or above to be considered and this eliminates a number of potential buyers. Those with an adequate credit score have a few options.

The first option is a total refinance of the home which includes the value of the pool to be built. Some lenders will finance up to 95% of the combined value. There are closing costs involved; but the interest rate is fairly attractive(usually in the 7% range).

The second option being offered is a credit card with credit lines up to $50,000.00. This option carries an interest rate anywhere from 10% to 19% and is being used to get the project started with the intent to refinance at a lower rate in the future.

A third option offers a non secured loan up to $25,000.00 and offers twelve months same as cash or five and ten year payoffs. For the buyer with a short term cash flow issue; this can be quite attractive.

Though not as easily obtained as a second mortgage (before the housing market collapse) and not tax deductible (except for option one); these alternatives do allow people to proceed with pool construction while waiting for the economy to turn around.