Is There Ever A Right Time To Buy A Time Share?
Neighbors of ours recently returned from a trip to the shore where they stayed at a friend’s house. It turns out that these friends lent them the place as it was one of the weeks in their “time share” and was their turn to use it, but they couldn’t. Unlike some time shares, this arrangement was a ¼ share where the owners had 13 weeks scattered throughout the year when they could visit the place. Most of the summer months are enjoyed by the co-owners, with the off season rented out to vacationers or left unused.
Our friends aren’t interested in buying a share, even though one is available, but who can blame them? Time shares have gained and maintained an awful reputation over the years, a money pit for some owners or an inconvenient home for others.
Not every time share deal is a disaster, however, as I have learned that several reputable companies have jumped in and started offering time shares including Disney and Marriott. I can think of one Marriott destination at the shore that would make a wonderful time share, a beautiful retreat that could be worth the investment especially for frequent shore visitors and people who don’t like to maintain a beach cottage.
But, before you opt for a time share there are some things that you should know:
Prices can be grossly inflated. If you are buying a new time share, you’ll pay the full price which includes a hefty commission mark up. Instead, why not consider buying someone else’s time share? Likely, they’re looking to unload their share, especially in a soft market. I can’t recommend anyone off hand, but when I googled “time share resell” quite a few sites popped up in the results.
Not a good investment. I don’t know anyone who has made a profit off of a time share. Let me go one step further – I don’t know of anyone who invests in real estate who holds a time share. Given that they aren’t a good investment, why buy one? For the reason I mentioned previously: a time share could give you a minimal hassle place to stay when visiting your favorite resort.
Maintenance fees and taxes can be costly. Not only do you need to buy your portion of the residence, but you’ll be responsible for your portion of the taxes and upkeep. You’ll want to learn what your share of the expenses will be and how much you can expect to pay over the long haul which can include costs to replace a roof, provide insurance coverage, and more.
So, is there ever a right time to buy a time share? I would think that time would be now and for a price that is well below market rate. If you have the stomach for this type of purchase and the deal you get looks to be a solid one, then considering a time share might be worth your while.
Just don’t snag a good deal because it looks good on surface – read the contract and weigh your options.
12b-/08 home financing
Mortgage Lending Tip
for the weeks of: May 13
Minimum Payment Loans
Beware! Minimum payment loans were popular during the housing boom. It allowed applicants to buy homes in expensive markets with minimum repayment plans. The problem is that these plans have a trigger, which reverts to the standard repayment plan after a period. Homeowners found that their new mortgage payment jumps 3-4 times. So read the fine print before you sign up for a minimum payment plan.
Weekly Tip:
You Can Save Money For A Down Payment
America is coming out of a strange fog, one that first settled down on our country during the heady days of the 1990s. Back then, the way lenders determined how mortgages and other loans should be offered was relaxed, allowing consumers to become homeowners with little or nothing down.
The worst form of that fog could be found in the form of no-documentation mortgages, those lending vehicles where prospective homebuyers were not required to show proof of income. A well meaning plan to help low income people become homeowners ended up being a boondoggle, one whereby homeowners could not keep up with mortgage payments and soon found themselves having their homes foreclosed. A contributing factor to today’s economic climate were these sub-prime mortgages, something that has cost our country dearly.
Qualifying For A Home Loan
Lending requirements have tightened considerably over the past few months, making it much more difficult for first time home buyers to jump in the market. With housing prices off considerably from highs reached in 2006 and 2007, the opportunity to find an affordable home is quite good. Still, many borrowers are finding that they need to have very good credit (a credit score of at least 700) and a sizable down payment, usually 20%.
These two requirements has made it difficult for first time buyers, especially those who don’t yet qualify for a loan. However, what you can’t afford today, you may be able to afford six months, one year, perhaps three years from now, opening up a world of opportunity if you can patiently wait.
To reach your goals of having enough money for a down payment, the following steps can help you get there as soon as possible:
Establish a savings pattern – If you have $15,000 saved toward the purchase of a home and know that you’ll need as much as $30,000 to qualify for that $150,000 house, that means you need to save another $15,000 in as reasonably short a period of time as possible. If you desire to become a homeowner within the next two years, then that means you’ll have to set aside $625 per month in savings to reach your goal. If you can spare that much money over that time, then your goal is within reach. If not, you either need to stretch out your savings plan or consider other ways to raise the money.
Attack your debt — While saving for a home, you’ll want to also make sure that your debt is reduced and that you are up to date on all payments. Your credit history will be scrutinized by your future home lender. Make sure you pull your credit reports and clean up any potential problems. The better your credit, the higher your credit score. The higher your credit score the increased likelihood you’ll be approved for a loan and get that mortgage at a fair rate.
Control your expenses — The #1 hazard to your bottom line are your expenses. Some costs you cannot control, but many of them you can. Consider consolidating debt, choosing a better cell phone plan, downgrading your cable, eating in, shopping in bulk, cutting back on entertainment costs, etc. There are plenty of ways you can save on expenses without radically adjusting your lifestyle — make good use of the internet to find the best way to conserve your cash!
Live on a budget — Once you have full knowledge of your income and expenses, then you’ll be a position to establish a budget that can help you reach your goals. You’ll have a better understanding of where your money goes and what steps you can take to save more money with a budget. Living on a budget now will help you when you become a homeowner, giving you the power and freedom you need to succeed.
Bank on it — The money you are setting aside for your down payment should be placed in an interest bearing savings account. This is no time for you to put your money at risk, but it could be a good time for you to lock in your money for twelve months or longer at a high interest rate. Currently, certificates of deposits (CDs) are paying about as much as 4.25% through online institutions such as ING Direct. Your money is insured, it’ll grow faster, and you can reach your goal sooner.
Seeking Help As You Embark On Your Journey
Finally, if you are having trouble reaching your goals, being accountable to someone else can certainly help. Your spouse, friend, or trusted professional can be of assistance to you, offering their perspective on matters and encouraging you along the way.
Saving money to buy a home can be a trying experience. However, once you qualify for a home and find the house that you like, you’ll find that all of your hard work has paid off, giving you the most valuable asset that anyone can own.
10b-/08 home financing
If You’re Qualified, Buying A Home Is Smart!
The key, of course, is being qualified. Unlike just a few years back when mortgage lending rules were relaxed to let hundreds of thousands of people buy homes who would never had been qualified under today’s rules, the mortgage market is actually quite good for today’s buyers. Consider the following:
Mortgage Rates — Lo and behold, mortgage rates are still quite good. A 30-year fixed rate mortgage can be had for just under 5%. This means that if you’re in the market for a modest home, you’ll find the best rates provided you have a sizable amount of money to put down and your credit is very good.
Weak Housing Market — You’ll want to steer clear of neighborhoods where foreclosed homes are dominant, but don’t be afraid to pluck a distressed sale from a better neighborhood where few homes are being offered for sale. Make your move quickly because savvy investors are smelling an opportunity and although they may be thinking about flipping, they still have to consider whether the market will rebound in the next few months to consider making an investment now.
At Or Near Bottom — Double digit drops in housing values over the summer and additional drops this fall are indicating that the bottom of the market may be near. Unfortunately, no one knows when the bottom has been reached, but if home values are off by 20% or more in your area, do you think that a downward spiral will continue?
If you plan on looking for a home this fall, get your financing lined up in advance. That way, when you find a home, you can show wary sellers that you are mortgage qualified and ready to negotiate seriously and follow through on your offer.
02b-/10 home financing
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