Mortgages/Loans
Posted by
Michael Cook
Michael Cook
Timeshare ownership is small, but growing. Aggressive salespeople and misinformation dupe many people into taking the plunge, but is it really a sucker's game?
Short answer, yes. Timeshare salespeople use some strong pressure sales tactics to encourage people to make high thought decisions under duress and in a short time frame. Unfortunately for about 1 in every 5 people, who attend presentation, they become the victim of what I like to call a sucker's game.
A sucker's game is something that seems like a good deal, but with a little thought and time is obviously only a deal for suckers. For those of you who have already bought timeshares, please do not take this personally. The name actually comes from the games created for carnivals. Similarly, those games seem so easy. If the teenager working the booth can get the ring around bottle, surely you can right? Of course you can’t; hence the name sucker’s game.
Timeshare presenters know three simple facts.
1) If you do not buy today, there is almost no way you will come back and buy again.
2) They are selling something that is two times what you should pay.
3) Even at half the price, a timeshare is not worth the money.
With that on the table, you may ask yourself how they ever get people to buy, or better yet, how they got you to buy. The first warning bell should be the fact that the deal expires right after the presentation. I personally have a rule of never buying something if I cannot take a day to sleep on it and do the math myself. During my first timeshare presentation, this and this alone saved me from making a very bad purchase.
By taking a little bit of time after my first presentation to browse the internet, I found that timeshares were selling for 50% of the price I was quoted at the presentation. If I was ever going to buy a timeshare, I would certainly buy it from a reseller and not during a presentation. For those of you really interested in buying a timeshare despite my best attempts to dissuade you, check out this article on how to buy a timeshare.
After addressing the first two facts during the first 15 minutes of my online research, I found the third fact doing my own, more in-depth, research. Timeshares claim to be inflation protected. This is just not true. All timeshares have some kind of maintenance fee component, which is typically glossed over in the presentation. Interestingly enough, the maintenance fee is subject to significant inflation and during some years will cost you twice what a typical vacation would during that same year.
Some savvy salespeople will mention that there is a cap on the amount a fee can be raised. Those salespeople always leave out the provision for special assessments, however. These tend to be levied in lieu of an increase in the maintenance fee to keep the fee in the sales presentations low. Special assessments can be 3 to 5 times the yearly maintenance fee.
After carefully looking at those facts, I decided that timeshares are really a bad deal and this doesn’t even include the fact that most people don’t use them every year. For a more detailed analysis check out this article on why you should never buy a timeshare. Additionally, I hope those who disagree will add some comments to the discussion board, I would love to hear some possible timeshare pros because all I can see is cons.
A sucker's game is something that seems like a good deal, but with a little thought and time is obviously only a deal for suckers. For those of you who have already bought timeshares, please do not take this personally. The name actually comes from the games created for carnivals. Similarly, those games seem so easy. If the teenager working the booth can get the ring around bottle, surely you can right? Of course you can’t; hence the name sucker’s game.
Timeshare presenters know three simple facts.
1) If you do not buy today, there is almost no way you will come back and buy again.
2) They are selling something that is two times what you should pay.
3) Even at half the price, a timeshare is not worth the money.
With that on the table, you may ask yourself how they ever get people to buy, or better yet, how they got you to buy. The first warning bell should be the fact that the deal expires right after the presentation. I personally have a rule of never buying something if I cannot take a day to sleep on it and do the math myself. During my first timeshare presentation, this and this alone saved me from making a very bad purchase.
By taking a little bit of time after my first presentation to browse the internet, I found that timeshares were selling for 50% of the price I was quoted at the presentation. If I was ever going to buy a timeshare, I would certainly buy it from a reseller and not during a presentation. For those of you really interested in buying a timeshare despite my best attempts to dissuade you, check out this article on how to buy a timeshare.
After addressing the first two facts during the first 15 minutes of my online research, I found the third fact doing my own, more in-depth, research. Timeshares claim to be inflation protected. This is just not true. All timeshares have some kind of maintenance fee component, which is typically glossed over in the presentation. Interestingly enough, the maintenance fee is subject to significant inflation and during some years will cost you twice what a typical vacation would during that same year.
Some savvy salespeople will mention that there is a cap on the amount a fee can be raised. Those salespeople always leave out the provision for special assessments, however. These tend to be levied in lieu of an increase in the maintenance fee to keep the fee in the sales presentations low. Special assessments can be 3 to 5 times the yearly maintenance fee.
After carefully looking at those facts, I decided that timeshares are really a bad deal and this doesn’t even include the fact that most people don’t use them every year. For a more detailed analysis check out this article on why you should never buy a timeshare. Additionally, I hope those who disagree will add some comments to the discussion board, I would love to hear some possible timeshare pros because all I can see is cons.
Posted by
Michael Cook
Michael Cook
Refinancing your home can be a great way to raise money for new investments. Use the refi process to maximize your future cash flow without stretching your budget.
Most homes hold thousands of dollars of equity just waiting to be unlocked in refinance. Many homeowners look at their home equity as a safety net or even a second retirement fund. Making the decision to refinance your home and extract this value can have significant implication on your financial future. So how do you manage the refi?
The Right Time to Refinance Your Home
Rates are near historical lows and appear to be creeping upward. Unfortunately there is no way to predict future rates, so attempting to time your refi will inevitably leave you drawing at straws. A better idea is to refinance when you have an opportunity to invest the money in a better vehicle than your home.
Do not mistake this for market timing. If you get an opportunity to buy an additional home or if you have always wanted to invest in a business, a home equity loan might be a low-risk financing alternative.
Refinance with a Plan
Never take money out of your home without a cohesive plan for the funds. This plan should go beyond vacations, new cars, or furniture. While there is nothing wrong with having a little bit of fun, remember your home is your biggest investment. As such, your plan should incorporate an investment strategy.
Home equity loans provide great capital for down payments on rental properties, start up funds for an entrepreneurial venture, or investments in the stock market. Keep in mind when you take equity out of your home, you are essentially increasing your debt. This is not entirely bad because the interest is tax deductible, leaving you with a pretty low cost of borrowing. This does, however, make having an investment plan important.
The Right Time to Refinance Your Home
Rates are near historical lows and appear to be creeping upward. Unfortunately there is no way to predict future rates, so attempting to time your refi will inevitably leave you drawing at straws. A better idea is to refinance when you have an opportunity to invest the money in a better vehicle than your home.
Do not mistake this for market timing. If you get an opportunity to buy an additional home or if you have always wanted to invest in a business, a home equity loan might be a low-risk financing alternative.
Refinance with a Plan
Never take money out of your home without a cohesive plan for the funds. This plan should go beyond vacations, new cars, or furniture. While there is nothing wrong with having a little bit of fun, remember your home is your biggest investment. As such, your plan should incorporate an investment strategy.
Home equity loans provide great capital for down payments on rental properties, start up funds for an entrepreneurial venture, or investments in the stock market. Keep in mind when you take equity out of your home, you are essentially increasing your debt. This is not entirely bad because the interest is tax deductible, leaving you with a pretty low cost of borrowing. This does, however, make having an investment plan important.
Switch from ARMs to Fixed Loans
Posted by
Michael Cook
Michael Cook
The housing market has been sliding for over a year now. As interest rates continue to rise, it might be time to abandon the Adjustable Rate Mortgage in favor of Fixed.
Mortgage rates are on the rise. It might be a good time to consider taking fixed financing over option ARMs (Adjustable Rate Mortgages). Banks like to entice borrowers with lower rates on ARMs to increase their future upside on the loan.
Over the last five years mortgage rates have been at all-time lows. Borrowers have done well with either option ARMs or fixed financings because of the relative stability of interest rates. This nirvana may be coming to an end. With three years of Federal Fund rate increases, mortgage rates have begun to climb. Additionally, with the sensationalized coverage of the sub-prime lending markets, mortgage rates seem destined to rise.
In the face of these signs, borrowers will do better locking in today’s historically low rates. Additionally, borrowers who currently have ARMs should consider refinancing to a fixed rate now.
Over the last five years mortgage rates have been at all-time lows. Borrowers have done well with either option ARMs or fixed financings because of the relative stability of interest rates. This nirvana may be coming to an end. With three years of Federal Fund rate increases, mortgage rates have begun to climb. Additionally, with the sensationalized coverage of the sub-prime lending markets, mortgage rates seem destined to rise.
In the face of these signs, borrowers will do better locking in today’s historically low rates. Additionally, borrowers who currently have ARMs should consider refinancing to a fixed rate now.