First-time DVC Purchase -- Resale

[cometdad2010]

Hi everyone,

We are in the process of purchasing our first resale contract through a well-known DVC resale listing site. The seller has accepted our offer, and I'm reviewing the contract.

We are planning to finance through Monera with their no credit-check option. I'm well aware of the cost of financing and plan to pay it off within the next six months with a bonus check -- there's no pre-payment penalty, but this contract was perfect for us and I didn't want to pass it up.

In the contract, the purchase is NOT contingent on the buyer (us) obtaining financing. I've already contacted Monera; I've been told there shouldn't be any issues since the purchase price is over $4,000 and that's essentially their only requirement, but they won't send a commitment to finance letter until we have a fully executed contract signed by all parties (buyer and seller).

My question is -- has anyone had financing with Monera fall through for any reason? Is there any cause for me to be concerned before signing this contract? Thanks for any help you can provide.

 

[hlhlaw07]

Hi everyone,

We are in the process of purchasing our first resale contract through a well-known DVC resale listing site. The seller has accepted our offer, and I'm reviewing the contract.

We are planning to finance through Monera with their no credit-check option. I'm well aware of the cost of financing and plan to pay it off within the next six months with a bonus check -- there's no pre-payment penalty, but this contract was perfect for us and I didn't want to pass it up.

In the contract, the purchase is NOT contingent on the buyer (us) obtaining financing. I've already contacted Monera; I've been told there shouldn't be any issues since the purchase price is over $4,000 and that's essentially their only requirement, but they won't send a commitment to finance letter until we have a fully executed contract signed by all parties (buyer and seller).

My question is -- has anyone had financing with Monera fall through for any reason? Is there any cause for me to be concerned before signing this contract? Thanks for any help you can provide.

By law you have 10 days to rescind the contract for any reason after signing. So, if Monera needs the contract signed to commit to financing then just sign and if financing falls through rescind. Now if Monera will not make the decision within your 10 day window, then I wouldn’t enter into a non-contingent contract that you are only willing to move forward with if you have financing. Also, I don’t believe the brokers will change that “non-contingent” clause.

 

[RoseGold]

If you have to finance it, I wouldn't do it. Yes, financing can and has fallen through, for reasons that may or may not be in your control.

More importantly, financing shifts the math. Almost always better just buying cash. Run the math on your situaion.

 

[zakdavid]

IN my experience they send the commitment to finance in that 6 day window.

 

[cometdad2010]

By law you have 10 days to rescind the contract for any reason after signing. So, if Monera needs the contract signed to commit to financing then just sign and if financing falls through rescind. Now if Monera will not make the decision within your 10 day window, then I wouldn’t enter into a non-contingent contract that you are only willing to move forward with if you have financing. Also, I don’t believe the brokers will change that “non-contingent” clause.

Thanks for pointing that out. I hadn't fully read the contract when I posted this. That makes me feel better -- we should have everything good to go from Monera within the 10 days.

 

[cometdad2010]

IN my experience they send the commitment to finance in that 6 day window.

Excellent! That's what I was hoping to hear. Thank you!

 

[zakdavid]

Excellent! That's what I was hoping to hear. Thank you!

and my bad I meant 10 day window.

 

[Bobby2443]

Regarding the comment about financing above I think the simple math shows that’s true but there are other considerations. If you live outside of the US there could be currency reasons to want to stretch out payments and if you’re an employee at a company you get tax taken off every check but if you’re a business owner and pay yourself at your own discretion there could be tax implications to taking on a large lump sum to pay off a contract up front (which is my case) that offsets the interest. Financing does have its place for some people which shifts the math

 

[cometdad2010]

Hi everyone,

Another question today. I got a document from the title company asking about the desired tenancy. The deed will solely be in myself and my wife's name. The choices are:

• Single person (not married) DOES NOT APPLY
• A married person (only one person buying this property) DOES NOT APPLY
• Husband and wife (may be selected only if husband and wife are purchasing property)
• Joint tenants with rights of survivorship (two or more people, with rights of survivorship)
• A living/family trust DOES NOT APPLY
• A corporation DOES NOT APPLY
• A married couple, joint tenants with rights of survivorship
• Other

My question is -- what's the difference between choice 3 (husband and wife) and choice 7 (a married couple)?

Is there any advantage to one or the other for myself and my wife?

Thank you!

 

[dominickolas]

These are all related to probate. The other option you have to consider is if you would like to put it in a trust. Do you want it to be owned 50/50 or do you want if one of you dies to be passed on to the survivor without having to go through probate?

 

[hlhlaw07]

Hi everyone,

Another question today. I got a document from the title company asking about the desired tenancy. The deed will solely be in myself and my wife's name. The choices are:

• Single person (not married) DOES NOT APPLY
• A married person (only one person buying this property) DOES NOT APPLY
• Husband and wife (may be selected only if husband and wife are purchasing property)
• Joint tenants with rights of survivorship (two or more people, with rights of survivorship)
• A living/family trust DOES NOT APPLY
• A corporation DOES NOT APPLY
• A married couple, joint tenants with rights of survivorship
• Other

My question is -- what's the difference between choice 3 (husband and wife) and choice 7 (a married couple)?

Is there any advantage to one or the other for myself and my wife?

Thank you!

Choice three is what is referred to as a tenancy by the entirety. Your ownership interests are linked and are really viewed as one interest that cannot be severed without severing both interests. It transfers automatically at the time of death to the surviving spouse. No need to probate the property at the death of one spouse.

Joint tenants with rights of survivorship also acts similar at the death of one spouse, but does not necessarily have to. The interest each spouse holds can be severed independent of the other spouse. This type of property holding allows each spouse to sell or will their interest in the property. Either tenant can break the joint tenancy.

If you want to know all the ins and outs of these types of property holding I suggest you google difference between tenancy by the entirety and joint tenants with right of survivorship.

 

[cometdad2010]

Choice three is what is referred to as a tenancy by the entirety. Your ownership interests are linked and are really viewed as one interest that cannot be severed without severing both interests. It transfers automatically at the time of death to the surviving spouse. No need to probate the property at the death of one spouse.

Joint tenants with rights of survivorship also acts similar at the death of one spouse, but does not necessarily have to. The interest each spouse holds can be severed independent of the other spouse. This type of property holding allows each spouse to sell or will their interest in the property. Either tenant can break the joint tenancy.

If you want to know all the ins and outs of these types of property holding I suggest you google difference between tenancy by the entirety and joint tenants with right of survivorship.

Thanks, hlhlaw07. I emailed the title company the same question, and they told me that in the state of Florida, there isn't any difference between the two options -- apparently in Florida, husband and wife are automatically joint tenants, not tenancy by the entirety. Is there any truth to that that you're aware of?

 

[cometdad2010]

and my bad I meant 10 day window.

Update for anyone interested: Commitment to finance letter was received within 24 hours of Monera receiving the contract signed by all parties. No concerns there at all!

 

[hlhlaw07]

Thanks, hlhlaw07. I emailed the title company the same question, and they told me that in the state of Florida, there isn't any difference between the two options -- apparently in Florida, husband and wife are automatically joint tenants, not tenancy by the entirety. Is there any truth to that that you're aware of?

Well, I will start with the disclaimer that I am not a Florida Attorney, so I am not an expert on the property and estate laws relevant to Florida. But a quick search tells me that Florida is actually the opposite of that. Anything held by husband and wife is presumed to be a tenancy by the entirety. But I would venture to guess that presumption works just like all other legal presumptions and can be rebutted. Expressly staying in a deed that the husband and wife are joint tenants should do the trick. As far as I can tell, it’s just a presumption and not a prohibition on husband and wife holding property in other ways. So it seems like you spoke to someone who doesn’t really understand the property and estate laws of Florida. It also doesn’t make sense that they have the different options if they are in fact the same, so I’m more inclined to believe they didn’t know what they’re talking about. But again, I’m not licensed in Florida, so I am also not an expert on the property laws.

 

[zakdavid]

Update for anyone interested: Commitment to finance letter was received within 24 hours of Monera receiving the contract signed by all parties. No concerns there at all!

Awesome!

 

[CanadaDisney05]

Regarding the comment about financing above I think the simple math shows that’s true but there are other considerations. If you live outside of the US there could be currency reasons to want to stretch out payments and if you’re an employee at a company you get tax taken off every check but if you’re a business owner and pay yourself at your own discretion there could be tax implications to taking on a large lump sum to pay off a contract up front (which is my case) that offsets the interest. Financing does have its place for some people which shifts the math

Just to add, if you're paying cash, you are taking money that otherwise could be invested. Lets say the rate of return on a traditional ETF or mutual fund is 6% annually. The cost interest rate of financing is 10%. It doesn't make sense to leave your cash invested in a mutual fund and then finance your DVC. Financing is costing you 4% (10 - 6) every year on average.

However, lets say you are financing through a traditional mortgage or HELOC at a rate of less than 2.5% (which is what I did), paying cash does not make sense. If I pay cash, I am giving up 3.5% (6 - 2.5) every year.

Like you said, financing does have it's place for some people which shifts the math.

 

[sethschroeder]

perfect for us and I didn't want to pass it up.

I brought this up with an extended closing date.

There is no such think as a contract so special that you won't find another one pretty similar in 6 months time especially if you are not locked in to a UY yet.

What is the contract details that makes it so different?

Do what you wish but these are unprecedented times and there will be people selling by the end of the year who never thought they would ever sell unfortunately.

 

[cometdad2010]

I brought this up with an extended closing date.

There is no such think as a contract so special that you won't find another one pretty similar in 6 months time especially if you are not locked in to a UY yet.

What is the contract details that makes it so different?

Do what you wish but these are unprecedented times and there will be people selling by the end of the year who never thought they would ever sell unfortunately.

For us, timing was everything. We're planning an Oct 2021 trip and want to be booking at the 11-month mark, so I need to close and have everything in the Disney system by November of this year. Yes, waiting might have allowed for a better deal, but might not have closed in time. We've been considering this for the past several years, and I seriously started looking and watching the listings regularly six months ago.

 

[sethschroeder]

For us, timing was everything. We're planning an Oct 2021 trip and want to be booking at the 11-month mark, so I need to close and have everything in the Disney system by November of this year. Yes, waiting might have allowed for a better deal, but might not have closed in time. We've been considering this for the past several years, and I seriously started looking and watching the listings regularly six months ago.

So I assume BCV/BWV/VGF/CCV other than that you really wouldn't need the contract right at the 11 month mark in October likely. Understood on the timing and that makes way more sense on why you might stretch it to your bonus coming up.

I would honestly set up a plan b and plan c for options of where to get the money as well just in case. This way if they fall through for some strange reason. You might look at something like a personal loan through Discover? Its not the best interest rate but its a worst case scenario.

 

[sethschroeder]

Just to add, if you're paying cash, you are taking money that otherwise could be invested. Lets say the rate of return on a traditional ETF or mutual fund is 6% annually. The cost interest rate of financing is 10%. It doesn't make sense to leave your cash invested in a mutual fund and then finance your DVC. Financing is costing you 4% (10 - 6) every year on average.

However, lets say you are financing through a traditional mortgage or HELOC at a rate of less than 2.5% (which is what I did), paying cash does not make sense. If I pay cash, I am giving up 3.5% (6 - 2.5) every year.

Like you said, financing does have it's place for some people which shifts the math.

Based on your theory you should refinance every time you can do it for no cost and even remove equity from the house every chance you get. Is there not risk that is associated with that?

Also if you are doing it in lets say January this year you are now actually negative to where you were. Yes the market likely will rebound over time but it seems like a bad play to take on debt of a timeshare to put that money in the stock market.

It gets me thinking under your plan you should actually take on the 18-24 month interest free credit card debt whenever possible and invest that as well.

Just seems to risky but I haven't ever really looked in to it.