Take the plunge now? or later?

[joeytdog]

My family and I have rented points each of the last two May's. Each May the trip cost us about $2400 for the room.

I really would like to buy DVC at BCV but here is my issue

Due to finances, I would have to put 10% down and loan out the rest for 10 years. From my research it looks like 10-11% for that type of loan.

I have a rental property that I am going to sell in exactly 3 years (May 2011) which should more than cover the cost of my DVC twice over....even in this market

I am wanting I believe 300 points, as that would cover a week once a year

The cost is close to $27,000

Should I purchase now knowing that I can pay it off in 3 years with the house sale? And bite the bullet with $2000 interest being paid for the time (3 years into the 10 year 10% loan is about $2,000 interest per year)?

Or do I just wait until I close on the house in 3 years and then buy?

All the while paying $2400 again and again on renting points?

Thoughts?

 

[DVCLiz]

My family and I have rented points each of the last two May's. Each May the trip cost us about $2400 for the room.

I really would like to buy DVC at BCV but here is my issue

Due to finances, I would have to put 10% down and loan out the rest for 10 years. From my research it looks like 10-11% for that type of loan.

I have a rental property that I am going to sell in exactly 3 years (May 2011) which should more than cover the cost of my DVC twice over....even in this market

I am wanting I believe 300 points, as that would cover a week once a year

The cost is close to $27,000

Should I purchase now knowing that I can pay it off in 3 years with the house sale? And bite the bullet with $2000 interest being paid for the time (3 years into the 10 year 10% loan is about $2,000 interest per year)?

Or do I just wait until I close on the house in 3 years and then buy?

All the while paying $2400 again and again on renting points?

Thoughts?

Could you strike a happy medium and buy some now and some later? Could you buy 160 points now, and 140 points in 3 years when you sell your house? You could bank the new points and have 280 next year for a vacation, or you could take shorter trips until you have all the points you want.

Just a thought - before everyone who is going ot say "Don't buy DVC if you have to finance it" shows up and rains on your parade....

 

[chalee94]

don't buy DVC if you have to fina...

*Dang it!*

( )

 

[Noreendisfour]

I feel like I think the exact opposite of most people

You put 10% down now. And then instead of renting at $2400 next year and then $2400 they year after, just make payments instead. And then pay off the loan on your third year which is when you'll be selling your house anyway.

I mean if you KNOW that you will be going to rent about that amount of points for the next 2 years anyway, why not put that money back into your own investment and not into someone else's pocket?

 

[shortypots]

I am one of the few that would say do it now. The prices are not decreasing for DVC, they are increasing.

If you buy direct from Disney, you will pay top dollar especially for BCV, on top of that you will have to wait for them to get some in stock. Although, the financing you will get will probably be tax deductible (but check with your tax advisor).

I would personally buy resale for BCV if that is what you want, and try to finance via a HELOC or Home Equity loan, again the interest would most likely be tax deductible (again, check with your tax advisor)

The $2000 interest could be saved in the amount of money you would have spent renting vs paying your maintenance fees. ($2400 - 1440 * 3 yrs).

My personal feeling is take the plunge, but that is what I would do.

 

[makthompson]

i would do it now and finance it. that is what we did. in feb 04 bought 300 pts put half down and the rest was done through financing, then we make extra payments on it when we can.

if i would have known about DVC in 2001 then we would have bought it then and saved a bundle on trips in the mean time.

 

[DVCLiz]

Everyone is giving good advice - if you are really committed to buying now and will be able to pay it off in three years. It's actually not such a great idea to finance DVC, but if you're comfortable with the decision and you have assets in the near future that will pay off your loan, I think it makes great sense to go ahead now. Especially if you were going to spend $2400 a year renting points - absolutely go ahead and put those dollars into your own DVC pocket, not someone else's!!!!


But, do think about breaking up that 300 point contract. I think your first purchase has to be 160 points, but you could break the 300 points into 160 and 140 - it would be easier if you decided in the future to "downsize" any of your points.

 

[CarolMN]

In my opinion, a vacation purchase should not be financed, especially in this economy.

Yes, you may continue to spend $2400 renting points every year, but you are not obligated to do so if something in your personal situation changes.

DVC will still be here when you are able/ready to sell your rental property.

 

[Halle]

My answer is buy now since the prices are increasing unless it will be a fihardship.ncial

 

[Dean]

I think it's foolish to finance such a luxury purchase. If it's that important, skip a couple of years and save that $8000-10000 you'd pay for those 2 trips plus what ever else you can save in the interim then pay cash possibly buying less points then add on when you can. You'll enjoy the trips so much more and have less stress before, during and after your trip if you do so.

 

[joeytdog]

Well, here are what my numbers come up with......

Option One: Assuming 300 points at $12 per point for three years is $10,800 and then lets say $27,600 at year three to buy then is a total of $38,400. This assumes the price to be the same in 3 years!

Option Two: Lay down `10% ($2,760) Assume a payment of $344 monthly ($25,000 at 11% for 10 year) for 3 years with annual dues of $1440 and $20,112 to pay off the loan (say $20k for roun ding purposes) That is $2760 plus $16704 payments plus $20,000 to pay it off at year three for a total of......$39,464

So a difference of $1,000

So will BCV points go up more than $3.33 in three years

That would be my break even

This also assumes a cost of $12per point to rent as well. That could increase as well. A $1.00 a year and my breakeven goes down to $100 and no rise in 3 years

 

[Dean]

Well, here are what my numbers come up with......

Option One: Assuming 300 points at $12 per point for three years is $10,800 and then lets say $27,600 at year three to buy then is a total of $38,400. This assumes the price to be the same in 3 years!

Option Two: Lay down `10% ($2,760) Assume a payment of $344 monthly ($25,000 at 11% for 10 year) for 3 years with annual dues of $1440 and $20,112 to pay off the loan (say $20k for roun ding purposes) That is $2760 plus $16704 payments plus $20,000 to pay it off at year three for a total of......$39,464

So a difference of $1,000

So will BCV points go up more than $3.33 in three years

That would be my break even

This also assumes a cost of $12per point to rent as well. That could increase as well. A $1.00 a year and my breakeven goes down to $100 and no rise in 3 years

Counting on selling the rental property is a huge risk and unknown IMO so you'd really have to assume the full 10 years if you financed and then HOPE that things worked out on the rental.

In those 3 years you would have paid around $12500 total with around $20K remaining on the loan for a total of almost $40K as you say. I think the flaw in your thinking is you're giving yourself credit for what the trip would have cost if you paid for it at full price, a very flawed way of thinking in my book. And you've still got the risk of a large loan at 11% or so hanging over your head. It sounds like you've got your mind made up and going to find some way to justify it, your choice of course but you did ask for opinions. Mine is you should work hard, save the money, delay the gratification, then when you sell the rental you can make the choices with only the risk of the yearly fees but I know it's not the american way. And IMO, one can likely buy BCV for the same OR LESS in 3 years and you'd then have the option of going resale and saving even more.

 

[joeytdog]

No you guys are right, if you have to finance it you shouldnt do it. I want it so bad that I was willing to look past all that. Heck with this economy I could see prices easily staying the same over the next 3 years. But even so, a $300 monthly payment for DVC is not worth it when it comes doen to it. DAMN I wanted to do it!

 

[Dean]

No you guys are right, if you have to finance it you shouldnt do it. I want it so bad that I was willing to look past all that. Heck with this economy I could see prices easily staying the same over the next 3 years. But even so, a $300 monthly payment for DVC is not worth it when it comes doen to it. DAMN I wanted to do it!

That sounds like a very honest and smart appraisal. If you want it you can make it happen the "right" way.

 

[twinklebug]

No you guys are right, if you have to finance it you shouldnt do it. I want it so bad that I was willing to look past all that.

I'm right there with you with the temptation to buy in now, but I made a promise to myself never to finance our vacations. I'm a cash only gal.

... Just think about how painful car payments are and how great it feels to make that last payment...
yea, no thanks, I want that "it's mine" feeling from day one

 

[makthompson]

my rate is 9.50% and is directly taken out of my account every month, dont even miss it. + interest is tax deductable, just like a home loan.
this way too i only have to come up with the spending money and travel for each trip.
i would rather make monthly payments and put the extra 2400 per year down toward the principal and reduce the interest you are paying and pay it off in 3 years. when i bought 4 years ago the price per point was like $84.00 now i think it's over or close to $100. that's $4800, to buy later.
ours will be paid off in 2 years and i wouldnt change how we did it.