Real estate article: Financing your dream back yard pool

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You don't have to be rich to put a swimming pool in your back yard, but you do need good credit, in most most cases. With a solid financial history and a little planning, you can get a loan to build a custom pool, and realize the home of your dreams. There are a variety of options for financing pools, so home owners can find the payment schedule and loan amount that suits them best.

The most common pool financing method is a home equity loan. Sometimes called a "second mortgage," this is a loan in which the borrower uses the equity in their home as collateral. The loan creates a lien against the borrower's house, which reduces their equity - in effect transferring it to the lender. Home equity loans are commonly used for major repairs and upgrades like swimming pools, as well as large medical bills, and college educations.

While home equity loans are secured against the value of a home like traditional mortgages, they usually run for a shorter term. Another difference between home equity loans and traditional mortgages is that it's often possible to deduct interest payments on them from personal income taxes.

There are two types of home equity loans: "closed end" and "opened end." In a closed end loan, the borrower receives a lump sum when the loan closes, and begins to make payments on a schedule. These loans commonly allow as much as 100 per cent of the home value to be borrowed, although some lenders will go even higher, and some states, such as Texas, have laws permitting only a certain percentage to be borrowed. In an open end loan, also referred to as a home equity line of credit (HELOC), the borrower can choose when and how often to borrow, with the lender setting a credit limit based on the criteria similar to a closed loan. Borrowers can usually access these lines of credit for up to 50 years.

Other financing options for pools include bank loans, manufacturer payment plans and loans, and third mortgages for borrowers already paying back a second mortgage on another project.

About the author of Financing your dream back yard pool

You can learn more about Las Vegas Real Estate at ehomelv.com. The site has tips for buyers and sellers, a comprehensive home search, and information on markets surrounding Las Vegas, including the rapidly expanding Summerlin real estate area.