Financing your swimming pool

[Trish29]

I'm new at this forum. Forgive me if this is the wrong board, but I could not find a board that discussed financing. Am looking into getting a fiberglass pool from San Juan and they offer financing through GE financial. Has anyone any experience with seperate financing aside from a second mortgage?.. If so, what terms were you offered?

I'm not keen on getting one with the interest rates the way they are now and too, I just built my house last year so I don't have all the much equity in it right now. I am having the mortgager send me information on how to get rid of the PMI (two years of PMI was way cheaper than taking out a second) and seeing if a pool qualifies as an "improvement".

Any information on this would be greatly appreciated.

[larry2338]

If you access to a Credit Union, they might have the best loan rates.

[ehorn]

Well I have to say that GE Financial is probably amoung the most common one for people to work with. First off yes a pool is considered an "improvement" as it will increase the value of your home. Usually you can finance up to 125% with a second mortgage if it's for improvement type loan, hard to get this if you are going to pull cash our or consolidate debt.

What I would watch out for is interest rates. GE is pretty competitve but it can also be good to shop around, don't just get one rate quote. I would suggest going to a few other sources such as a local credit union or some other major loan companies such as Countrywide or eLoan.

Unfortuantely not much you can do about the PMI unless you refinance your entire first mortgage and the first is 80% or lower from the current appraisal price of your home.

Anyways thats just the info I have from my own experience.

Good luck,
Eric

[GTakacs]

We did a 3rd mortgage at 7.24% for 15 years on our pool. We just bought our house in March and did an 80-15-5 to avoid the PMI. We got 5.75% on the first (30 year fixed) 8.25% on the second (15 year fixed balloon amortized over 30 years) and now 7.25% on the third (15 year fixed).

It really helped us that we just bought the house so our appraised value was what we paid for it. With the 3rd mortgage they let us borrow up to 125% of appraised value + 50% of the value of the improvement. This was more than enough. The whole thing cost $85 processing fee.

[Trish29]

Unfortuantely not much you can do about the PMI unless you refinance your entire first mortgage and the first is 80% or lower from the current appraisal price of your home.
___________________________

Naa.. With PMI you just request it to be canceled once the value of the home or the equity or a combination of both make it where you've reached 80% LTV. You don't have to refinance the loan in order to get it canceled.

Your other feedback was interesting though. I appreciate knowing about the 2nd and 3rd mortgage info as well.

[GTakacs]

Naa.. With PMI you just request it to be canceled once the value of the home or the equity or a combination of both make it where you've reached 80% LTV. You don't have to refinance the loan in order to get it canceled.

Unless you have an FHA loan, in that case you're screwed and can't cancel it like that.

BTW The low 3rd mortgage interest is what caused me to go with a pool builder instead of DIY. I was ready to build it myself but interest rates for self builders are sky high and wasn't worth it.

[PhantomAndy]

Obviously it's always best to try to save until you can afford to purchase the pool outright.

However, if you are going to finance it, do it as a home equity loan. This will allow you to deduct the interest that you pay on the loan from your taxable income, saving you money on your taxes. You won't be able to write off the interest on the financing with a finance company like GE Capital (Double check this with your tax advisor, I could be wrong).

We took out a home equity credit line to do our pool, but the processing was slow, and we started the process a little late. We ended up paying cash for our pool since we had enough (barely) to cover the payments as they came due. The home equity credit line was never used and closed a year later when we locked into a 5% 15 year fixed mortgage.

Good luck

[Trish29]

Unless you have an FHA loan, in that case you're screwed and can't cancel it like that.

________________________
I have a conventional loan which I can request cancellation. I just don't know if they'll agree that all the improvements ie, fence, deck and brick walkway on the side house PLUS the pool will be enough along with the 5 percent I put down last year along with any value added appreciation will be enough to cancel it. We shall see. My mortgager is Chase.

[Trish29]

The home equity credit line was never used and closed a year later when we locked into a 5% 15 year fixed mortgage.
________________________________________

wow.. that's a good fixed rate lock. The best one I've found so far is with Navy Federal and it's lock is at 6.5%.. all other's are higher percentages. But I like this alternative. I think I'm clearer now on what direction to take. I'm seeing about getting the PMI off the first mortgage then applying for this HELOC through Navy Fed. Deduct the interest on it come tax time. Seems like a plan.

[PhantomAndy]

Yes - 5% fixed was a great deal. I have a friend in the banking business, not that I got a better rate, but he called me when the rates hit 5% about 1 1/2 years ago, and we moved quickly to get that deal. Total savings for us if we keep the loan to term will be about $150,000 over our previous loan that was 30yrs @ 6.25%.

That was our 3rd refinance since buying the house in 1997 (started on a 30 @ 8.125%).

Rates are on the rise now - our current home equity credit line is at 6.75% so I suspect that the typical fixed rate loans are in a similar range for most buyers.

Good luck with your project - you will enjoy your pool no mater what option you choose to go with.

[Trish29]

Thanks PhantomAndy...

*sigh*.. recalling the days when I had a 4.25% heloc.. those were the days......:rolleyes:

[Sardian]

My line of thought is that if you can't pay cash for a pool then you shouldn't buy one. But that is just me. Even with a good rate and financed for only 5 years, you will be paying the bank at least $5,000 in interest on a $25,000 loan.

I would suggest cutting back on other things and save up for a couple of years and pay cash. You'll be surprised at how hard it is to let go of the money when you have it in cash.....I saved up $30,000 for a car once and decided I didn't really want the car that bad once I had the cash in hand.

Just my thoughts,

Russell

[GTakacs]

My line of thought is that if you can't pay cash for a pool then you shouldn't buy one.

Well that is one way of living. Let's see how my reasoning goes:

Let's assume the following:
- I will live in my hosue for 15 years
- I can buy a pool in 2006 for $40k
- I can get financing at 7.5% for 15 years as of today
- I can earn 4% interest on my money if I save it.
- Inflation will be 2% annually on pools in the next 15 years

OK, now let's look at the financing figures.
If I borrow $40k for 15 years at 7.5% today my pool will cost me $370/month for 15 years. Since I had the pool for the entire 15 years my actual cost of the pool was $370/month (only the monthly instalment payment).

If I have no money in the bank right now (I am broke) and I would not want to finance it, I'd have to start saving up for it. I'd save $370/month just as if I were to make the payment on the financing. After 108 months I would have $48,004 in the bank if I saved at 4% interest compounded monthly. By then the $40k in today's money pool would cost $47,881 given the 2% inflation. So that would mean I'd have to save 108 months, 9 years precisely before I could enjoy my pool.

After 9 years, I'd still save the $370/month for the last 6 years at 4% interest while enjoying my pool. I would have $30k in the bank after 6 years. So the pool would cost me $508/month, (($370*180 months)-$30,000 saving)/72 months. So the true cost of the pool just went up from $370 to $508 per month not to mention the actual lack of a pool for the first 9 years while living in my house.

I hope the above math makes sense and proves just how much value there is in "renting" a pool.

Note that the numbers were calculated based on the above assumptions.

Edit: I forgot to add that I did not take that into account the fact that you can also deduct the interest from your AGI (Adjusted Gross Income) for tax credit on a home improvement/equity loan which makes borrowing even more beneficial. On the above $40k loan at the 20% bracket that would be an additional tax saving of $5320 over the 15 year term (more in the early years, less in the later).

[GTakacs]

Even with a good rate and financed for only 5 years, you will be paying the bank at least $5,000 in interest on a $25,000 loan.

Actually at 6% for 5 years on $25k you'd pay just under $4k in interest.

[Jeffski]

Or you lose your job, can't pay the loan, and lose your house too.

I am not against borrowing money, but when you do make sure you can pay all your bills even on your worst day.

[GTakacs]

Or you lose your job, can't pay the loan, and lose your house too.

I am not against borrowing money, but when you do make sure you can pay all your bills even on your worst day.

Sure, I guess. But to be honest I doubt that a bank on a 3rd mortgage would rather foreclose your house than give you a bit of time off to regroup and find another job. By the time they sell your house and pay off your first and second mortgage, little if anything is left for the 3rd mortgagor.

[bobyoe]

I just would be sooooo nervous to finance 125% of my home's value. Just me maybe.
Boby

[GTakacs]

I just would be sooooo nervous to finance 125% of my home's value. Just me maybe.
Boby

Why? It actually gives you a better chance of holding onto the house if you can't make the payments. The bank that financed the 3rd lien that is 25% over the value would get nothing if they foreclosed, so they'd be more inclined to let you miss a few payments and make it up later than sell off your house.

I'm not condoning maxing out credit cards or foreclosing on houses, but I think borrowing more on a house than it's worth is just fine. What is the worst that can happen?

[towney]

Owner of a Mortgage Company and new IG pool owner here. On the topic of getting rid of PMI you must have a 24 month history of PMI with your current mortgage company to request dropping PMI, otherwise you will need to refinance if you what out of PMI with < 24 months history. Best thing to do is to contact your current mortgage company and ask them their requirements to eliminate PMI.
Financing a pool. I typically take my clients to banks that have what's called a second mortgage pool loan. They take the improved value with the pool and loan off this, this would be a good option for folks with little value into their home. Check with your local credit unions or banks to see if they have this option.
Hope this helps.

[Looony2nz]

<<I typically take my clients to banks that have what's called a second mortgage pool loan. They take the improved value with the pool and loan off this, this would be a good option for folks with little value into ther home. Check with your local credit unions or banks to see if they have this option.
Hope this helps.>>

yes, we did this with a company here in S. Florida, very simple, worked out great.

[South_Texas_Sun]

If you have your house paid for, financing might not be that bad, but if you are basing the loan amount for a second (or third) mortgage on the current price of housing, you might just consider what happens if real estate prices drop (or heaven forbid....plummet)

Having been through 4 housing drops now, I can tell you that it's no fun. People offering their houses for sale at "ridiculous" prices, and still no buyers. The market becomes awash with houses for sale and with the recent legislation making it much harder to discharge debt (bankruptcy) there's going to be a lot of long faces when the current mania stops in housing and everyone's looking for a chair at the same time in this global version of musical chairs.

No down payment loans, interest ONLY loans, mortgage loans to illegal aliens(!), first time buyers expressing relief at "getting in" to the market because it's "just going to go higher".........these are ALL red flags waving at the top of the largest housing bubble in history.

You can argue all you want. This is way it ALWAYS looks at the top, and if there wasn't disagreement about the future, there wouldn't be a "market." (so save your breath, I know all the contrary arguments.)

Not trying to be an alarmist, but arguing that financing is BETTER than paying off a debt is just another sign of mania, imo.

Some of the dumbest things I've ever done, were done on "credit". Your results may vary. :)

[adillenal]

I guess I am totally out of it but I didn't even know you could have a 3rd mortgage.
Anyway, I have a savings account but I also wanted a pool but knowing myself as well as I do, realized that if I used my cash for the pool I would probably NEVER build my savings up again. ( Mainly because I never saved it in the first place. It was a windfall from a relative) So, I borrowed against my own money. I make monthly payments, my savings account is my collateral and I will end up with a paid for pool and my savings intact. Bank was happpy to do this since it is a no lose situation for them. Add on automatic pay and we have our own little back yard oasis for us and our teenager and all of his friends.
Too much debt right now scares me and I have to agree with South Texas Sun. I remember the last time the housing bubble burst here in Texas. I had friends that owed way more than their house was worth.
But a pool is comparable in cost to a car. My Excursion and my pool cost the same thing. I sure hope the pool lasts a lot longer.
Just thought I would throw out another option.

[GTakacs]

If you have your house paid for, financing might not be that bad, but if you are basing the loan amount for a second (or third) mortgage on the current price of housing, you might just consider what happens if real estate prices drop (or heaven forbid....plummet)


I guess I still don't see what the houseing price and market value of my house has to do with the fact that I'd rather finance a pool for 15 years as a 3rd mortgage instead of saving up for 9 years before I could get one paid for with cash.

A Pool is NOT and investment! A house is NOT an investment! The best thing that could happen for me right now is a big ass inflation with my wage following it. A Pool does not add any value to the house (some parts of the country it's even a huge detriment) so you might as well write it all off. I figred if I pay $40k for something I might as well enjoy it as long as I can. As for a house not being an investment: if you live in a nice house now and it appreciates greatly in the next 10 years, guess what the rest of the houses will be doing, including your next dream house? They'll go up in price just as well. So if you sell yours then you'll have to shell out a lot more for your next one. Unless you're planning to downsize after the big price hike then upsize again after a downturn and love to move with all its associated fun and expense, I would not consider buying a house an investment. Anyone telling you that a house (primary residence) is an investment is lying!

I just bought a house that I plan to send my kids to college from (right now I only have one, he's 18 motnhs old) so I don't care about the market value of my house or where it's headed. I don't plan to borrow against its value any time soon (3 mortgages are enough) so who cares what the value is or if I'm upside down right now?

Both me and my wife are professionals so I really don't think we'll have to find a new job any time soon or if we do it'd be all that hard.......

I guess we got pretty off topic here, but as long as the price of borrowing money is as low as it is right now, I don't see any reason not to do it.

[Jeffski]

Disagree. Real estate is almost always a good investment. The increased equity in your first house is going to help you buy your second. True, the value of your second home has risen probably equal to your first, but would you be able to afford it without the equity from your first house? Most people wouldn't.

[GTakacs]

Disagree. Real estate is almost always a good investment.

OK, let's look at numbers:

You buy a house for $200k today and you have your eyes on a house that is $300k today. You put down 10% ($20k) on the current house. You locked in a 6% interest for 30 years in the remaining 90%. Your mortgage will be $1080/month.

Then the housing in the area goes crazy and everything appreciates 25%. So the house you live in now worth $250k and the house you wanted to live in now costs $375k. So you sell your house after 5 years od living in it. You would owe $168k and you could sell for $250k. You'd pay 6% for realtor fees ($15k) and another 3% for closing costs ($7.5k). So you would have a net profit of $59.5k ($250k-($15k+$7.5k+$186k)). So now you have $59.5k as a down payment on your new dream house that costs $375k. You tripled your down payment from $20k to close to $60.k in 5 years for an actual gain of $39.5k and it had an opportunity cost of $75k since that is how much your dream house appreciated too.

So now you put the $60k down on your $375k house and you end up financing $315k for a monthly payment of $1880 (assuming that interest staed 6% in the past 5 years). Had you bought the house 5 years earlier for $300k with the $20k down payment you'd had to finance only $280k. Your monthly payment would have been $1680 ($200 less than on the new finance) you would have 25 more years to go (instead of the 30 you would if you bought it 5 years later) and you'd owe $260k on a $375k house.

Now go and tell me that buying the $200k starter home in the first pace was a good investment!

Granted I didn't include the $600/month extra you would have had to pay for the past 5 years, so that's another $36k that we'd have to subtract from the equation making the scenario where you buy the $300k house right away less profitable than the math above makes it look like. Or we could just include it in the other scenario as an additional $36k down payment towards the $375k home making your total down payment $96k ($60k profit of sale + $36k savings from lower monthly payments) so you'd end up financing (gasp!) $279k for 30 years. That is the same as the original $280k had you bought the $300k house 5 years earlier.

However, what are the odds that someone who can't afford $1680/month for a house today would have $1880/month for a house 5 years down the road?

Again, a house is NOT an investment! It's a place to live with all its associated cost and benefits.

[South_Texas_Sun]

Both me and my wife are professionals so I really don't think we'll have to find a new job any time soon or if we do it'd be all that hard.......



Lol......famous last words. A house, yes, even the one you live in, is a commodity, no different than pork bellies (which you could, in theory, eat) but with one important difference. It's a LOT less liquid! (no pool pun intended :) )

I would imagine, since this is a pool forum, that most people here are professionals or at least self employed with enough net worth to own their own home. (otherwise, they'd be building a pool for the owner, right?)

So this cautionary thread applies to anyone who is cavalier enough to buy a pool, financed or not. The pool you build is a depreciating asset with monthly costs attached, not unlike an automobile which is also an investment, but a very poor one if you buy one with a bad resale value. (like say, a gas guzzler right now)

But this brings up an important point.

Projections of the future always assume that things will continue as they currently are. This is almost always a logical fallacy, and it's well worth your time to consider the opposite. For example, what happens if your professional job becomes worth less because of competition. And the housing market DROPS 25% instead of gaining, so you go to sell your house to move to a better location for work, and guess what? You're 25% in the hole, instead of in the black.

Instead of inflation, you get recession, deflation, or even depression. (not far fetched despite all the talk of "it's different this time".)

Please understand, I'm not wishing this for ANYONE, it's just that this current environment should raise some caution amongst borrowers. Don't EVER borrow money if you have the assets to pay in cash! It's the principal of the "magic of compounding interest", but working AGAINST you instead of FOR you!

I know, it sounds "fuddy-duddy-ish", but anyone who's ever gotten in financial trouble (or read enough history) has learned this lesson.

All that said, we're currently building a very nice pool, but paying cash and trying to pay off all debts, because I personally believe that the economy is going to be "off" for a period in the not-too-distant future and cash/hard money assets will be king.

With over 30 TRILLION dollars in dollar-denominated consumer debt in this country, do you really want to want to be a net-debtor? Have you heard the expression, "all in the same boat?"

Just something to think about. :)

[Jeffski]

I just wrote a long post and then deleted it because we're splitting hairs here. I agree with your advice to avoid debt, pay cash, and keep risk low. All good points. I just know I have personally benefited from the equity I've earned on more than one house so even though you should not treat it as an investment, it usually turns out to be a very good one.

Good debate.

[South_Texas_Sun]

I just wrote a long post and then deleted it because we're splitting hairs here. I agree with your advice to avoid debt, pay cash, and keep risk low. All good points. I just know I have personally benefited from the equity I've earned on more than one house so even though you should not treat it as an investment, it usually turns out to be a very good one.

Good debate.

Hi Jeff, Yes REI usually turns out very well. I bought my first property in Newport Beach, Calif. in the late '70's and all our properties have appreciated very well over the years.

However.....:) The people getting into "flipping" during the last couple of years are seeing massive returns in a very short time, so the temptation is to keep on buying and trying to flip. This is how the REI "boom" has driven up the prices so far, so fast.

People are quitting their day jobs to become "real estate investors", and that's the worrisome part. This is EXACTLY how the REI boom/bust cycle begins every time, except that THIS TIME, it's being enabled by the Fed raising the M2 money supply (originally to help prevent "Y2k" rifts) and resulting in the free money sloshing around in the form of easy-to-get, "no money down", qualify ANYONE,......CREDIT.

This is the game of "musical chairs" I was referring to, and I've thought seriously about liquidating all our REI assets in California, just for that reason.

Our basis cost is almost laughably low on some of these places, so I'm not afraid of getting hurt. But I do sense trouble in the making, and someone (just to get back on topic for the fun of it :) ) who's financing a pool with a second on their house BASED ON CURRENT HOUSING PRICES is underwater all ready, they just don't know it. :)

I usually don't have that much to say on these subjects, but there's several things about "this time around" that are very worrisome to me, and I hate to see people buying into the mania of everything going up all the time.

It doesn't. And one of the most notable examples of the "credit bubble" bursting was the 1929 crash and great depression.

Good discussion.....thanks :)

[GTakacs]

Both me and my wife are professionals so I really don't think we'll have to find a new job any time soon or if we do it'd be all that hard.......


Lol......famous last words.

Let me rephrase: Both me and my wife are professionals in the oil/gas/energy industry in TX so I don't think we'll have to find a new job any time soon. :D

BTW, when housing pricing goes down interest goes up so the average monthly payment for a house remains similar (it's probably the other way around, interest driving house prices not house pricing driving interest).

I figure if there is something similar to 1929 coming I'd be screwed either way 3rd mortgage or not so I try not o lose too much sleep over it.

Yes, good discussion BTW.

[South_Texas_Sun]

Let me rephrase: Both me and my wife are professionals in the oil/gas/energy industry in TX so I don't think we'll have to find a new job any time soon. :D

BTW, when housing pricing goes down interest goes up so the average monthly payment for a house remains similar (it's probably the other way around, interest driving house prices not house pricing driving interest).

I figure if there is something similar to 1929 coming I'd be screwed either way 3rd mortgage or not so I try not o lose too much sleep over it.

Yes, good discussion BTW.

Hi GT, yes, I agree with you. A global recession would sink all boats and Texas oil would be no exception. This is one of the things that worry me.... I constantly hear people talking about the "emerging markets" and how China and India are industrializing--> thus keeping the price of oil high.

We in the US don't suffer high oil prices because of low supply. There's actually a worldwide oil glut, but not enough refining capacity to process it.

If the US suffers an economic downturn (and I believe it's only a matter of time) then the rest of the world is going to "catch pneumonia", mixed metaphors not withstanding. :)

Who'll buy the output of industrializing China, when the western countries have economic problems? Hence my "global" concern.

Do you remember Texas oil miseries in the late '80's? Think it could happen again? Nobody seems to think so, and that usually means exactly the opposite will happen. This isn't my opinion. It's the way ALL traded markets work.

Give my regards to T. Boone! :)

[bobyoe]

Well, like I said, FOR ME, I wouldn't be comfortable financing 125% of my equity for anything---pool, car, house or otherwise. Heck, I wouldn't be comfortable fiancing more than 75%!!! If others are comfortable with that, that's ok for them.
B

[adillenal]

South Texas Sun- I for one certainly remember the late 80's and the oil bust. Not a pretty picture.
I worry about a repeat which can easily happen. I guess the older I get the more conservative I am becoming concerning economics.
BUT I love my pool and am very gald we built it but am also glad it has no connection with my mortgage. (Only have one)

[South_Texas_Sun]

South Texas Sun- I for one certainly remember the late 80's and the oil bust. Not a pretty picture.
I worry about a repeat which can easily happen. I guess the older I get the more conservative I am becoming concerning economics.
BUT I love my pool and am very gald we built it but am also glad it has no connection with my mortgage. (Only have one)

Hi Adillenal, I'm glad we're building our pool too and although it's pretty nice, we're still working within a budget.

If I had to choose between no pool and one that I couldn't afford, I'd get out there in a kiddie pool if I had to! :)

It's funny. I had a very similar discussion to this with our pool builder. He said that he was having trouble getting financing for some of his customers because they had minor credit problems and wanted a home-equity-based loan. His pools are beautiful, but not real cheap.

He (the PB) pines for the simple days of building fiberglass pools, which he said were really just as good as gunite pools and seemed to last longer than liner pools, but still weren't too expensive to "build" or upkeep.

I think I'd go for fiberglass if I were financing, but find a PB whose price was commensurate with the lower installation cost. (in other words, spend 20-25k, but not 40k in equity!)

In the beginning of our project, I got quotes from PB's that were all over the map, obviously intending to take advantage of homeowners' ignorance of what a pool should cost and the corners that could be cut in the process. We were also offered loan packages that obviously put loan "points" into the PB's pocket. It's a real battlezone out there for the unwary homeowner.

But we decided against financing, opting to pay for a nice IG pool, because we had been shopping for homes where the pool was the deciding factor AGAINST buying the place. It would invariably be low quality or need repair. Too small or built into a landfill that had been "slabbed" over and the slab was cracking.....and on and on.

We wanted a pool that would add value to the overall home, and I think we're getting it. We're nearly done and although July 4th isn't going to find us swimming, our PB assures us that we will be by the middle of July. I told him, "if we weren't, he would be, and without water!"....lol.

I don't know if you watch the "Accuweather.com" climate forecasts on the nightly news, but they're talking about 1930's "dust bowl' drought conditions for our midwest plains, possibly for a decade or more. Shades of depression era, eh?

[adillenal]

Oh great. Just what I need is more dust. I don't know what is worse, the blowing dust or hopping grasshoppers. I have to empty the skimmers twice a day because of the grasshoppers.
I am not real astute with economics but my husband teaches it so I have to listen to him sometimes.;) Since we are within 10 years of retirement, I think about money a lot more than I did years ago. Also have a teenager to get through college.
We may not have saved a lot from the poolbuilder quote we received (Only one builder in our area) but we got a lot more by building it ourselves. About twice as large and we still are able to add the things we want such as wider decking, fence, retaining wall, landscaping and now we have decided to add a waterfall outside the pool in the landscaping to include a koi pond. The basic pool ( using a pool builder) for the size we have with what we have added would have been twice what we have invested. Nothing fancy like some I see but we have what is compatible with our income. Trying to live within our means.
We started our pool the beginning of June 2005, and finished August 2005. Takes a long time when doing the labor yourself. Luckily husband is off most of the summer.
We DO NOT regret our investment and it is an investment to us in that we are enjoying our home (which we also consider an investment)and it keeps our teenager home a lot. BUT I am not sure if we would have built it if we would have had to take out a second mortgage or finanace through a finance company. Since we don't have any plans on moving, we really aren't concerned about raising or lowering the value of the home for resale purposes.
Everyone has to decide what they can afford and what their priorities are but to be aware of what could happen if employment ceased. We are in education, so are pretty secure as far as employment goes.
Good luck with your pool and hope you are swimming before long.

[Pool_Mike]

Getting back to the subject. I got a direct pool loan by Lion Financial.

My rate imho was high. I got 9% apr for 20yrs. But I will refi after one year.

This is for a $30K pool-loan. It is a 2nd mortgage, but my home mortgage (1st mortgage) apr rate is 5.375 ;)

So I can tollerate it, plus I plan to pay more then the regular payment is for the 20 year loan. The more the marry'ER!! :P

[South_Texas_Sun]

Oh great. Just what I need is more dust. I don't know what is worse, the blowing dust or hopping grasshoppers. I have to empty the skimmers twice a day because of the grasshoppers.
I am not real astute with economics but my husband teaches it so I have to listen to him sometimes.;) Since we are within 10 years of retirement, I think about money a lot more than I did years ago. Also have a teenager to get through college.
We may not have saved a lot from the poolbuilder quote we received (Only one builder in our area) but we got a lot more by building it ourselves. About twice as large and we still are able to add the things we want such as wider decking, fence, retaining wall, landscaping and now we have decided to add a waterfall outside the pool in the landscaping to include a koi pond. The basic pool ( using a pool builder) for the size we have with what we have added would have been twice what we have invested. Nothing fancy like some I see but we have what is compatible with our income. Trying to live within our means.
We started our pool the beginning of June 2005, and finished August 2005. Takes a long time when doing the labor yourself. Luckily husband is off most of the summer.
We DO NOT regret our investment and it is an investment to us in that we are enjoying our home (which we also consider an investment)and it keeps our teenager home a lot. BUT I am not sure if we would have built it if we would have had to take out a second mortgage or finanace through a finance company. Since we don't have any plans on moving, we really aren't concerned about raising or lowering the value of the home for resale purposes.
Everyone has to decide what they can afford and what their priorities are but to be aware of what could happen if employment ceased. We are in education, so are pretty secure as far as employment goes.
Good luck with your pool and hope you are swimming before long.

Hi Adillenal,

Did you mean it only took 3 months to do-it-yourself on your pool? Or did you mean June 2004 to June 2005?

If you dug your own pool in 3 months, I'm green with envy. Our PB was wonderful at first, but has gotten slower and slower and we've become more impatient. I will never hire a contruction company like this again!

In the past, I've learned to do my own subcontracting for building projects, but I didn't know any pool builder types, and I figured, "what the heck, we'll get done quicker this way."

Lol......Wrong! We're almost done at 3 months, but there's been a lot of wasted time, during which I was essentially POWERLESS to do anything about it, due to the payment schedule and seasonal rush of people trying to build pools for the summer. Ours is a little more complicated, so we naturally are at the back of the line, even though we started at the front, when they had no other pool job to start!

About your grasshoppers (and other insects) .... Have you seen this website?
http://doityourselfpestcontrol.com/

We bought some of the pyrethrin-based powder and found it to be very effective in our backyard. It eliminated grasshoppers, scorpions, tarantulas, spiders, pretty much everything. (We live in the country)

The pyrethrin-based stuff is the same as our pest control guy used on his once/3 month intervals, and costs a fraction of his visits. Plus, it's a lot better for bug "emergencies" than the stuff you buy at the store.

I have a friend who's an economist, so I'll spare you all "one-handed" "dismal science" economist jokes that he's so fond of. :) Nice chatting with you.

[adillenal]

Took 3 months from start to finish. My husband and another coach (have at least 2 months in summer) did almost all of the work. Teenaged son and 2 of his friends also.
We thought we were slow. If we had not hit rock we would have been finished in a month or maybe even less.

[SeanB.]

This is an interesting discussion, although a little bit of an old thread. I thought I'd share my .02 anyway in case it helps anyone else on on the decision.

We just closed on our new home last week and construction on our pool is about to begin. My wife and I went back and forth for several months on whether or not to get a pool now or wait until next year - after we had gotten accustomed to our new house note, and also because I usually get pretty good bonus and could have put down additional cash - would still have to finance some either way though.

We ended up rolling our pool into our loan for a few reasons. We wanted to get it built while we have no neighbors next door - construction has started on the lot next to us, but we don't have to get any permission or worry about landscaping, sprinklers, etc. Also, we got a better interest rate than we would have gotten with a a "Pool Loan" from a company like GE financial.

We have some friends who put in a pool after owning a home for a couple of years and they financed at a higher rate. They did not like the high payment, so they eventually refinanced their home and rolled the pool in. They got a better rate and got to deduct the interest, but still had to pay several thousand in refinance costs. When they built their last home, they included the pool and said they would definitely do it that way again.

We have three children and plan on staying in this home for quite some time-no less than 15 years, until all three in are college. I'm in an industry that provides pretty stable employment and it's unlikely that I'll be transferred so fluctuation in home prices isn't a real worry. In other words, I'm not overly concerned with the resale value on my house. My main consideration was making sure I ended up with a manageable monthly payment. Once we had the final figures from the mortgage company and realized how small of an increase a pool would make to our monthly note, it became an easy decision.

In finance terms, as I understand it, we weren't actually financing for more than the value of the house, but adding to the value of the house and then financing for that increased value (yes I know pools don't add that full amount of value, but in financing terms they do).
Of course, everyone's situation and priorities are different so I certainly understand why some people choose to pay cash and others decide not to build at all. This is just the route we chose.

[webfeet]

We chose the more economical IG liner pool because we knew we were digging a hole in the back yard and throwing money in to it. Moreover, the majority of our money can never be retrieved. But, we did it for our kids and grandkids. Yet, if we could not continue contributing the max to our pretax retirement options and monthly after tax savings plan, we would not have built a pool. If we had to make any payments, we would have forfeited the pool. Realizing that the pool is a "want" and not a need, we decided to save about 30% over other type IG pools, and settle for the vinyl. (We are going to sell our travel trailor, too)
It was a "plunge" to build an IG because we just don't spend much money frivilously. Hopefully, the enjoyment it brings us and our family will help us forget about the potential earnings we forewent to get the pool.
Years ago, we read Larry Burkett's "The Banker's Secret"- and we determined to get out of debt and to start earning interest, instead of paying it. It was one of the best decisions we have made. We were debt free by 40 years of age. We believe that how much money you earn each year is not as important as what you do with your earnings. We don't worry about the APR. In fact, the higher the better, cause that makes the APY, which we are interested in, go up too. :D
For the average person, who is still carrying debt on a home, I would not recommend buying a pool or any major "want" on credit. Larry Burkett's book, The Banker's Secret, has helped shape my opinion. No one knows the future,- life and health are fragile, not to mention economic climates. Consider the ants and the way they store for future needs, although today they may have more than they can use.

[SeanB.]

I think you mean The Bankers Secret by Mark Eisenson.

However, there are some other considerations to make before ditching your mortgage:
http://www.noteworthyusa.com/bankers_secret.html

[webfeet]

I think the book I am speaking of was written in the 80's and I think it was authored by Larry Burkett. Nonetheless, the author promotes the concept of getting out debt, and shows you how to calculate the money that is saved when prepaying on a mortgage. The savings are huge when a mortgage is young. Bankers tend to be wealthy because they realize and take advantage of the way interest works. However, I reviewed the site posted above. I love tax deductions as much as anyone else:D . But I believe that interest that is deductible only reduces my taxable income by the deductible amount. For example purposes, assume I paid 6,000.00 a year in interest that qualfied as a tax deduction, and assume that I am in a 10% tax bracket, I would save $600.00 in taxes, so I would still have a loss of$5400.00:mad: . I'd have to make at least that much on my investments just to break even.( assuming that I am not paying any interest on credit cards, cars, or other financed items, in which case I will still be in the hole:eek: )Please IM me, if you know of any safe or moderately risky investments funds that have routinely made as much as 8 or 10% consistently in the last few years, much less 14%:confused: . I am surprised the moderators have permitted some of these posts to remain, since they are off the original thread subject. But to get back on subject, I have rethought the financing of a pool. If you need to borrow money to have a pool, perhaps you could borrow from your parents or other relatives that would let you have the funds interest free. Better yet, get them to finance your house interest free!:D

[SeanB.]

Clearly the interest rates were different when that site was made, as they were at the time the book was written. However, the same principals still apply. The home we just closed on has about a 6.5% interest rate. I don't think you'd have to be too savvy an investor to beat that by at least 3% over a 30 year period. The historical average for the stock market, with all the highs and lows, is around 11.9%.

BTW, I don't doubt your word on the author of the book, I was just unable to find it. Amazon has dozens of books written by Mr. Burkett going back over twenty years, but none titled Banker's Secret. Maybe the one I found is an updated version. As I understand it, most of the book is tables anyway, so perhaps they made a revised version to apply to today's figures.

At any rate, my only problem with this type of discussion/debate is when people take the position that their way is the best way. There are so many different financial situations and scenarios that it really isn't fair or accurate to describe any one way as the best way to finance or pool, or do most anything for that matter. To me, it's helpful if people just give their experience and reasoning and then perhaps that will help others with their decisions.

Just my .02.

[webfeet]

I don't remember if the book was mostly tables or not. However, the principles are what interested me. Whether interest rates or 5% or 10%, the borrower is still paying to borrow. The less a person has to pay to use money, the better off he or she will be. Especially, if the money is used for non- necessities. Unless, of course, they are so wealthy that they need tax deductions related to operating a business. I am speaking of the average individual that has to borrow to pay for basic needs, when I discuss the benefits of not paying interest.
On the other hand, if someone was disciplined enough to remain in the stock market, and consistently make the right choices, over a period of 30 years or so that individual should gain maybe 8 to 10%. However, few people with 2 or 3 mortgages, car payments, and/or other revolving charge accounts,have the discipline to commit to routine deposits into investments, nor do they have the knowledge to make the correct choices. Many times they are so indebted that they don't have the spare funds in their budgets each month to make routine investments. In most cases, people are better able to invest when they are less indebted.
Financially speaking, for the average to upper middle income earner, in most cases, the less paid in interest the better. Yes, everyone's situation is different, but basic finanical principles remain. People have different priorities and different reasons for their actions. If a person's purchase that is financed, is escalating in value so quickly that their equity will surp*** the costs of interest, then paying interest may well be desired. However, pools don't usually appreciate in value.

[webfeet]

I stand corrected. The book, "The Banker's Secret", was written by Marc Ericson. With the depressed housing markets and foreclosures, and unemployment rates high, I wonder if anyone regrets borrowing money for a pool?


Webfeet