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Is It a Good Idea to Refinance Your Timeshare?

When you first purchased your timeshare, did you use a mortgage agreement to make the deal happen? If so, you might be realizing that the mortgage payments are hard to afford on a monthly basis, and refinancing might help you get some relief. But is it even possible to make this kind of financial move, and what will that look like in the end? Let’s take a closer look in the article below.

Before we get into the details regarding refinancing a timeshare, it’s worth noting that you don’t have to remain a timeshare owner forever. If you’d actually prefer to just be done with your timeshare, there are possibilities out there to make that happen, including working with a timeshare exit company. For some owners, simply opting to find a way out will work out better than refinancing and continuing on in the system. That’s a decision that you’ll need to make for yourself, of course, but don’t focus so tightly on refinancing that you lose sight of other possibilities.

The Potential Benefits of Refinancing

Whether it’s a mortgage for a traditional piece of real estate like a home, or something like a timeshare, there can be a variety of benefits to enjoy through refinancing. While it doesn’t always work out in your favor – and we’ll talk about some of the potential drawbacks in a moment – there are situations when refinancing is absolutely the right choice. Let’s look at some of the biggest potential benefits.

  • Lower interest rate. This is the primary reason why many people choose to refinance. If rates were higher when you initially took out the loan, and they have since fallen to a more attractive range, you might want to look into refinancing as a way to save money on interest payments month after month. Depending on the size and term of your loan, even a modest reduction in the interest rate on your mortgage could prove to be more than worth it in the long run.
  • Reduce monthly payments. Another reason to try refinancing your timeshare would be to bring down the monthly payment amount. If you are having trouble making ends meet from month to month and you need to make some adjustments in your budgeting, refinancing might be a workable solution. This will typically involve stretching out the term of the loan so the monthly payment amount will come down as a result. If you happen to be in a position to reduce your interest rate and extend the term at the same time, you might be able to save a lot of money from month to month.
  • Consolidate debts. If you are carrying a few different debts with various interest rates, it might work to your advantage to bring those together into a single note that has a lower rate and one monthly payment for you to make. This is a tactic that is often used by those who are dealing with debt issues and it can be an effective way to get your financial life back on track. Of course, this approach isn’t going to be right for everyone, so it’s important to think it through and you might even want to get the help of a financial advisor to figure out how to move forward.

These aren’t the only reasons that you might have to refinance your timeshare, but they certainly are among the most popular. As with all big financial decisions, you don’t want to rush into this one – take your time, consider what options you have available to you, and act accordingly.

Don’t Ignore These Drawbacks

Speaking of taking your time and considering your options, it’s worth noting that refinancing a timeshare does come with some potential drawbacks. These are the counterpoints to the advantages we highlighted above, and you’ll need to consider both sides of the equation while determining what should come next.

  • Closing costs. Refinancing doesn’t come free. You’ll almost always need to pay closing costs and other fees to make this happen, so those costs wind up eating into your savings from a lower interest rate or lower monthly payment. Don’t overlook the significance of these costs as they can add up quite quickly and might suddenly make the entire refinancing process look a lot less attractive than it did at first.
  • Extending the repayment period. Agreeing to a longer term on your loan when you refinance will make things look better for now, but you will be on the hook to make payments on your timeshare much longer into the future. A few years from now, you might wind up wishing you had stuck with the original loan and just worked on paying it off. And, since the repayment period is extended, that means more time paying interest on the loan, which will make the loan effectively more expensive.
  • Credit score implications. You’ll likely deal with a bit of a hit to your credit when you apply for a refinance. That’s not necessarily a reason to avoid this step – if it makes financial sense to do it, the credit score impact will be a minor issue along the way. Still, it’s something to be aware of so you can factor it into your decision-making.

One other downside to mention here is that it might be difficult to secure a refinancing deal in the first place. Many lenders aren’t crazy about working with timeshares, as they don’t really have any underlying value to protect the loan. So, you might find that you have to look around for a while in order to find a lending partner that is going to offer you a good deal.

Weighing the Pros and Cons

Don’t be surprised if your head is spinning a little bit after going through everything that factors into this decision. For example, you might find yourself excited by the possibility of lowering your interest rate and your monthly payment, but you might not like the thought of adding years to the repayment terms. Whatever the specifics may be, there is a lot to think about here, and you might struggle to come to a confident decision.

One way to deal with this matter is just to sit with it for a while. Unless there is some particular reason that you have to make this choice right away, don’t rush into it. Instead, take your time after you have gathered all of the necessary information and just let it sit. Sometimes, tricky decisions will get easier to make after you sit with them for a while, even if you aren’t actively working on a solution.

As we mentioned earlier on this page, it might also help to talk to a professional about the matter. A professional who helps people with financial issues day after day will be able to go over the pros and cons of refinancing with you and help you to see the big picture. Making an appointment with such a professional to pay them for an hour or two of their time won’t be particularly expensive and might put your mind at ease.

Does This Really Solve the Problem?

What might get lost in the process of thinking about the pros and cons of refinancing is whether or not this really solves the problem you are facing in the first place. Why do you need to refinance your timeshare? If it’s because you can’t really afford to keep owning it, refinancing is only moving the problem down the line rather than addressing it directly. What might be better is just getting rid of the timeshare entirely so you can save that money and put it toward other needs.

Or, as an alternative to getting out of the timeshare, you might be able to rent out some time at the property to make some money back and help to cover your obligations. This is another somewhat short-term solution, but that doesn’t mean it’s not a good idea. Maybe you wind up renting out your timeshare for a year or two until your financial situation improves or you finally decide to get out for good. Either way, the rental income can be a big help and could take away some of the burden of being a timeshare owner.

Is It Time to Get Out Completely?

While you are thinking about the option of refinancing your timeshare to make this experience more affordable, it’s also worth considering trying to cancel and get out of the timeshare life entirely. For that, you can call 833-416-8796
to get more information about timeshare exit services and how they can help you move on. You are also welcome to try our live chat feature to immediately collect more information. Thank you for taking the time to visit and we hope to work with you soon!

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