Where is Your Equity?

There are many reasons why there is no equity in a timeshare.  First and foremost, equity is the difference between the value of assets and the cost of the liabilities of something owned.  So in other words it is the difference between the market value of the property and amount of any mortgage or encumbrance.   Even though timeshare is treated as real estate, it doesn’t function in the same way.   You don’t own the land and yet you always have an encumbrance in the form of maintenance fees.  So even if you have paid it off, there is always debt.   If you took your deed into your bank and asked them to use it as collateral on a loan, what would they say? 

However, value is a perceived concept.  You’ve heard of the phrase, “one person’s trash is another person’s treasure”?   Your resort company will allow you to use your previous purchase as “equity” to purchase more property from them.  For that purpose, they would say that your property has equity.  But as you purchase more, you have more and more maintenance fees.  There was a program introduced a few years back that allowed you to use your equity and get into a program that had no maintenance fees.  If you never used your equity for this, you should see if your resort qualified.

What are my options?

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