A timeshare is a type of ownership that allows you to use a vacation home at various times throughout the year. Many people choose to purchase a timeshare because of the amenities and convenience that come with ownership. However, it’s important to keep in mind that buying a timeshare is not a wise investment unless your finances can accommodate the cost of maintaining and using the property. For instance, purchasing a timeshare with the hope of reselling it for a profit may not be financially feasible, especially since the real estate market is struggling.
In addition, if you’re late on your timeshare fees, the company can send you to collections, which will impact your credit score. If you continue to fall behind on your fees, the company can file a lawsuit against you in civil court, which will allow them to garnish your wages or levy your bank accounts. This will also make it more difficult to get a loan in the future, even if you eventually catch up on your late fees.
Another factor to consider is the possibility that maintenance fees increase each year, which makes it more challenging to keep up with payments. In fact, a common complaint of timeshare owners is that their maintenance fees are too high. This can lead to foreclosure if you’re not able to keep up with the payments, which is why it’s essential to do your homework before signing up for a timeshare.
Mortgages and Timeshare Deeds
If you purchased your timeshare with a mortgage, you’ll have to pay taxes on the property. The tax code has changed over the years, so it’s important to consult with your tax professional about current laws. Timeshares sold in the United States are usually titled in “fractional deeded ownership,” whereby you own a share of the property for a specific week each year. You can often exchange your timeshare for different locations and resorts.
If you purchased your timeshare with a loan from the developer, you may be able to refinance it to a lower interest rate. Alternatively, you can use a home equity loan if you’re able to unlock some of the equity in your home. The problem with this option is that it’s secured by your house, which puts your home at risk if you default on the loan.