Assumable Timeshare Loans only with WorldMark the Club by Wyndham

The Wall Street Journal community section recently looked at the question of assuming a timeshare loan, reporting that currently, only WorldMark the Club by Wyndham offers an assumable mortgage option.

Assumable mortgages, whether in residential property or in timeshare vacation ownership, historically have been considered an advantage for a property owner as they may make a property easier for a buyer to purchase and therefore more attractive to buyers in the marketplace. But assumable mortgages, in any venue, have become increasingly rare and they don’t necessarily represent a good deal for a buyer, especially in today’s changing real estate market.

First be aware that there are both qualifying and non-qualifying assumable mortgages. In the case of a qualifying assumable mortgage, the buyer has to meet standards of creditworthiness and ability to pay, just as if he or she was initiating a new mortgage that did not involve the seller. Also, the interest rate on an assumable mortgage could easily be higher than the interest rate for which a buyer in today’s banking market would qualify. Moreover, the property owner in a typical sales scenario will want to be compensated in some form for the equity the owner has in the property, meaning a cash payment to the owner will be necessary in addition to assuming the balance of the owner’s existing mortgage.

However, since most mortgages are structured to be front-end loaded on interest, the longer the mortgage has been in existence, the more the loan’s interest balance has been paid down. This means that a buyer, assuming a loan, could be jumping into payments that will eat away at the principle due in big, hearty bites.

Sellers, with an assumable mortgage should always receive a release of liability on the loan as part of the real estate transaction. If no document is in place, and the new buyer defaults on the loan, the original borrower is likely to become responsible for the debt. And although the property would return to the original borrower, taking possession of that property could take years if the matter became tied up in court.

Where Do Timeshares Fit into this Real Estate Picture?

As a timeshare buyer, you may be able to find an assumable loan from an existing owner of WorldMark the Club by Wyndham timeshare real estate. Depending upon the timeshare seller’s motivation, he or she may or may not require you to make a cash equity payment directly to the current owner in addition to assuming the balance of the upcoming timeshare debt.

Yet as you shop for a timeshare resale, do not expect to find many assumable loans, and remember that the loan’s terms, although assumable, may not be the best way to borrow money. A few lenders offer timeshare financing for a timeshare resale. Most often, the purchase of a timeshare resale is made through a personal line of credit or from the buyer’s savings. Although harder to come by than they used to be, sometimes a home equity line of credit is still the best way to purchase a timeshare resale.