DVC Financing on OK Credit

[Dean]

just trying to understand but how is putting something on HELOC putting your house at risk worst case you sell the DVC and what ever is not enough you put on person loan credit card or what ever you need to ,but you can very easily take a HELOC and if things go south your house is not at risk or do i not understand how a HELOC loan works?(i agree you will lose money doing this my point is you will not lose your house)

The loan is secured by the home. You're assuming that one can actually sell and sell in a timely manner and at a price to cover the risk, not guaranteed by any stretch of the imagination IMO. We'll have to disagree on the risk. But the problem isn't that in a vacuum, if that was the only issue, it likely wouldn't be THAT MUCH risk. The problem is that those willing to do so are making such moves in a number of areas. Car loans (or worse a lease), CC, and many other areas on average. roughly 1/5 of the US population has a net worth of zero or less and I doubt it's that much different for DVC members or it may even be worse. Roughly half had a net worth of 100,000 or less in 2016 including their home. 78% of those working live paycheck to paycheck and 10% of those making 6 figures can't make ends meet. Given that financing a luxury item doesn't make you smart, or good at math, I'm guessing the numbers are actually worse for DVC than those quoted. As it applies to this thread and this forum, my admonition is for those buying in that DVC is a blessing and not a curse.

 

[supersnoop]

just trying to understand but how is putting something on HELOC putting your house at risk worst case you sell the DVC and what ever is not enough you put on person loan credit card or what ever you need to ,but you can very easily take a HELOC and if things go south your house is not at risk or do i not understand how a HELOC loan works?(i agree you will lose money doing this my point is you will not lose your house)

If you need to use a heloc, do you qualify for a personal loan? By the time you’re delinquent and realize you can no longer afford your DVC contract, you likely can’t qualify to refinance it and probably don’t have the time it takes to sell and get your money. At that point, you certainly won’t qualify for any other debt products. You’ll be at least 120 days behind on a home loan by then and at risk of losing your house.

 

[the_grinch]

If you need to use a heloc, do you qualify for a personal loan? By the time you’re delinquent and realize you can no longer afford your DVC contract, you likely can’t qualify to refinance it and probably don’t have the time it takes to sell and get your money. At that point, you certainly won’t qualify for any other debt products. You’ll be at least 120 days behind on a home loan by then and at risk of losing your house.

need may be the wrong word to use a HELOC loan should have the best interest rate .not to mention you can (not sure with new tax laws) write off the interest .and you do have other ways to take it off your House ( money in 401k,credit cards or any other way short term to cover the bill) so you can sell for most it not all you owe on the loan, (by the time you find you can not afford it you should have payed something back which should cove closing cost and such)

 

[Bruin_mouse]

need may be the wrong word to use a HELOC loan should have the best interest rate .not to mention you can (not sure with new tax laws) write off the interest .and you do have other ways to take it off your House ( money in 401k,credit cards or any other way short term to cover the bill) so you can sell for most it not all you owe on the loan, (by the time you find you can not afford it you should have payed something back which should cove closing cost and such)

I happen to agree with you, but instead of discussing financing DVC on this board you may as well try to change someone's religion or politics, that's easier than swaying anyone's opinion on this topic. I don't want to speak for him, but Dean is an incredibly helpful person that's very generous with his knowledge and time. I think his point is that consumer debt is a slippery slope that can eventually lead to someone living beyond their means. I agree with him to the extent that nothing bad can happen as a direct result of paying cash for your purchase. Financing anything is always a risk. I happen to think, under the right circumstances, financing a resale DVC purchase can be a smart risk. However, there is great wisdom in the thought of why take a risk if you don't have to.

 

[supersnoop]

You could take out a car loan with lower rate than a heloc. Would refinancing a car and pulling cash out make more sense?

 

[Jelly563]

We have the loan planned out for the 10 years, kind of as a safety net. Based on what I have paid so far, we will pay our 10 year loan off in about 18 months.....but I like the flexibility to have a loan monthly payment that i can pay extra (6x worth) on as desired.

I do what DSL Ruser does.... I get a loan (usually Monera) for 5 yrs. Then, some months I make 5 payments. Other months, when I have things going on I just make the low monthly payt. I usually have a contract paid off in a little over a year. Easy breezy

 

[Dean]

need may be the wrong word to use a HELOC loan should have the best interest rate .not to mention you can (not sure with new tax laws) write off the interest .and you do have other ways to take it off your House ( money in 401k,credit cards or any other way short term to cover the bill) so you can sell for most it not all you owe on the loan, (by the time you find you can not afford it you should have payed something back which should cove closing cost and such)

Only 30% of people the last few years have itemized and it'll be far less this year, likely less than 10%, plus with the new tax changes you can't write of interest on a HELOC on a personal redince used to purchase DVC. You couldn't even write off the interest if used to buy a second actual home. Going forward, the HELOC has to be used for capital expenditures on the residence of the HELOC to be deductible with other qualifications as well.

 

[Matty B13]

With the large increase in the standard deduction, I think most people will stop itemizing deductions, I know we will. I just hope that it is made permanent like the corporate tax rate.

 

[Deb & Bill]

just trying to understand but how is putting something on HELOC putting your house at risk worst case you sell the DVC and what ever is not enough you put on person loan credit card or what ever you need to ,but you can very easily take a HELOC and if things go south your house is not at risk or do i not understand how a HELOC loan works?(i agree you will lose money doing this my point is you will not lose your house)

If you pay more than what that DVC contract is selling for during a downturn, you wind up owing more than you did to begin with. Look back at 2006 and there were lots of resales trying to make back in the resale what they still owed.

 

[jarestel]

I imagine the "average" DVC purchase is equivalent to a mid-range new car purchase and it's likely most people can and do buy new cars on a rather frequent basis. So if one can afford a new car, one could probably afford DVC. It's not that expensive in the grand scheme of things. Now whether one SHOULD buy DVC or not, given their individual situations, is something only the purchaser can answer for themselves.

 

[Aimee280]

my guide told me when i bought that you have to have a credit score of 640 or higher to get approved.

 

[DisneyDotts]

So I didn’t read all of these but I found on the resale market you can use a finance company that won’t actually run your credit. I don’t know if I can post the company or not. You have to put at least 20% down or more and then just pay the monthly payments and what ever the interest you chose. I think it’s like 10-15% interest depending on how much you put down. Not sure if your wanting the DVC membership to go on your credit to rebuild or if you wanted a way not to have DVC on your credit. Sorry again if I completely missed the point of this thread. Just read the 1st few items / posts about credit being ok. Also I would say if you can do without the perks then resale would be so much better. We’re looking into resale now and you can get so much more if you forgo to perks.

 

[Minniesgal]

just trying to understand but how is putting something on HELOC putting your house at risk worst case you sell the DVC and what ever is not enough you put on person loan credit card or what ever you need to ,but you can very easily take a HELOC and if things go south your house is not at risk or do i not understand how a HELOC loan works?(i agree you will lose money doing this my point is you will not lose your house)

If things have gone South because of a recession good luck selling points for enough to pay off the loan. Last recession people were almost giving them away. Really risky.

I would never advise buy DVC points on credit as they are not a need. And even if I would I would never advise financing through Disney as their interest rates are ridiculous. But if you must do it and must do it now put down 20% not 10% and get better rates and overpay every single month to get it paid quicker.

 

[Zach Levon]

If you do a home equity loan you can write off the interest on your taxes. this is short term; i think as i heard this tax benefit is being eliminated soon but even short-term helps. if you'd prefer not to use your home equity then check out the two dvc finance companies: 10% down Monera or if you can put 20% down you'd get a lower interest rate with Vacation Club Loans. both are great. One can finance direct purchases as well as resale

 

[Dean]

If you do a home equity loan you can write off the interest on your taxes. this is short term; i think as i heard this tax benefit is being eliminated soon but even short-term helps. if you'd prefer not to use your home equity then check out the two dvc finance companies: 10% down Monera or if you can put 20% down you'd get a lower interest rate with Vacation Club Loans. both are great. One can finance direct purchases as well as resale

It was stopped effective Jan first I believe. Now in order to write off a HELOC interest, the funds have to be used for the improvement/purchase of the entity itself. So you you got a HELOC to do capital improvements on your home secure by that home it’s deductible. If you used the same HELOC to buy a beach home it is not deductible even though a mortgage on that beach home might be. They also lowered the aggregate values you can deduct against, IIRC, you can only deduct up to $750K principle compared to the $1M before.