Equity loan or HELOC for pool?

[Bonaccan]

Trying to determine which is the best option for a pool construction?

[tcbofade]

A home equity LOAN will offer you a fixed amount, a fixed payment, and a fixed term.

A home equity LINE will offer you the option of using some piece of it, half of it, or all of it, and your payment and terms will vary.

I don't know that one is better than the other.  

IMHO, the disadvantage of a home equity LINE is that it CAN affect your credit report like a credit card... using the entire line looks like a maxed out card on one or more CRAs.... that's determined by the lender and how they report.

The advantage of a home equity LINE is that you can use it, pay it down, and use it again if needed.

If you are not certain of the cost of pool construction, a home equity LINE might be a better option for you.

We just took the HELOC route to put siding  on our home... we'll pay on it for a year or two, then use it to replace a deck!

Good luck!

[SouthJamaica]

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@Bonaccan wrote:

Trying to determine which is the best option for a pool construction?

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I would go with neither, because I don't recommend borrowing against your home.

[iheartwings]

I would also add that many HELOCs can have a variable interest rate (though some can convert to a fixed rate, aka hybrid HELOCs). There are also fixed rate HELOCs (which tend to carry a higher rate) which seems more like a home equity loan, where the rate is also fixed.

If you want flexibility a HELOC may be the way to go, but get an idea if you want a variable, hybrid, or fixed rate. You may choose a fixed rate if you want to hedge against the likelihood of interest increasing significantly. 

[SoCalGardener]

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@SouthJamaica wrote:

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@Bonaccan wrote:

Trying to determine which is the best option for a pool construction?

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I would go with neither, because I don't recommend borrowing against your home.

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This! ^  Having a lien on my home is one of my worst nightmares. Too many things can happen, unexpectedly...and you could lose your home.

[JFox418]

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@SouthJamaica wrote:

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@Bonaccan wrote:

Trying to determine which is the best option for a pool construction?

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I would go with neither, because I don't recommend borrowing against your home.

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I've been researching options to build a pole building on our property without paying cash and I think I'm with @SouthJamaica on this one. Plenty of options with home equity but that makes me so nervous. I'm not sure how much the pool is that you're looking to build but I'm looking at local credit unions with 3-4 year unsecured loan options that aren't bad at all. 

[Bonaccan]

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@JFox418 wrote:

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@SouthJamaica wrote:

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@Bonaccan wrote:

Trying to determine which is the best option for a pool construction?

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I would go with neither, because I don't recommend borrowing against your home.

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I've been researching options to build a pole building on our property without paying cash and I think I'm with @SouthJamaica on this one. Plenty of options with home equity but that makes me so nervous. I'm not sure how much the pool is that you're looking to build but I'm looking at local credit unions with 3-4 year unsecured loan options that aren't bad at all. 

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Did not know about this option. I will look into these now, thanks!

[Harvey26]

@Bonaccan I would also ask your pool builder to see if they offer financing. I know a coworker of mine was able to a 0% interest loan through Greensky for her pool. If they dont offer anything I would go certainly go personal loan route. DCU and Penfed come to mind when I think low rates. Maybe even get a credit card with a nice SUB and charge the cost of the pool on there and then just pay it off with loan money. 

[Cory88]

I would do a HELOC as most can convert some of the advance to a fixed rate and term and as you pay it back you can access more credit again without applying again. Most HELOC have a draw period for 10 years. I'm a big one on LOC vs a loan as it saves you if you need it again and don't want to have to reapply.

[Citylights18]

Lightstream is offering 20 year financing for home renovations/pools at 4.98%. For 100k the monthly payment is $659 a month so figure about $325 a month for 50,000 of financing. That's not a bad rate. You've got to get your estimates together to determine exactly how much the pool is going to cost you. There is a big variance among vendors for outdoor home improvements. Also think about what you can do without when putting in a pool. Maybe you could put in the hardscrape surrounding the pool or decking by yourself.

As to the HELOC's one of the main advantage is reusability up through the draw period. You can use a HELOC for infinity banking by resuing it as a source of funds to make catch up payments. I have one on an investment property which is $400 a month per 50k financed.

25k interest only PLOC checking (pay biz loan, first mortage, condo fee)....$180 interest a month on 25k.

50k HELOC (put all extra cash flow on this including rental income)

What you can do then is pump up your cash flow by putting all your rental expenses on the interest only loan so you can make additional payments to the HELOC and by doing so like rapid payment on a credit card you can skip required monthly minimums after making an oversized payment. Therefore its like you almost don't have a minimum. Now eventually you'll have to address the money you are putting on the PLOC. As you get close to 25,000 on the PLOC you'll have to pay the monthly spend on that, plus something like $500 dollars extra which can come from the HELOC. Maybe 2 months out of 3 that you'll be required to pay on your PLOC but that free month would allow you assuming your expenses are $2000 a month to pay your HELOC an extra 8k a year than normal.

I've done this before with a 12% credit card and a 15% CLOC but being able to do it with an interest only PLOC and a 5% HELOC is a much better combination. HELOC on my investment property and another property I'm just putting away equity for the time being on my primary home because the bank I work with I can go no bigger than 200k on a HELOC and using the very minimum estimates I have 75k equity so the longer I wait the bigger the one I can get from the property.