I thought DVC was for us, but...

[4 Little Bears]

As a career military family, we've never purchased a home (we move every 2-3 years and usually live in base housing). So it did seem kind of ironic to us this summer when we decided to purchase dvc, especially since we don't own a house!

But we like to think about all the future vacations we'll have at our "home away from home". So even if I don't give my children the same house for most of their lives, I can give them memories of many disney vacations (and that works for us.)

On the financial side, though, I worked extra hours to buy into dvc so it didn't come out of our "downpayment-for-a-house-should-we-ever-live-somewhere-long-enough-savings.

 

[DisDaydreamer]

As a career military family, we've never purchased a home (we move every 2-3 years and usually live in base housing). So it did seem kind of ironic to us this summer when we decided to purchase dvc, especially since we don't own a house!

But we like to think about all the future vacations we'll have at our "home away from home". So even if I don't give my children the same house for most of their lives, I can give them memories of many disney vacations (and that works for us.)

On the financial side, though, I worked extra hours to buy into dvc so it didn't come out of our "downpayment-for-a-house-should-we-ever-live-somewhere-long-enough-savings.

And I think that is perfectly fine... we have relatives that have retired from the military years ago and now are financially in great shape... certainly better than our situation...

 

[BroganMc]

I think the negativity he was hinting at was that some folks don't realize timeshares are considered luxury expenses. Often today people will buy things they want before getting the things they need. Housing, food and clothing are the three big necessities.

Now I'm always twitchy with debt so I practice a "save for tomorrow and pay cash today" philosophy. I never spend what I don't have and always leave a cushion in savings in the event I lose my source of income for a while. Our timeshares have always been paid in cash so it's only the annual dues we need to budget for.

If you think you might be dipping into the necessity pool too much, then your caution serves you well. Just look at what you have, what you need, and what you expect you'll do with your money in the near future.

DVC works for people who like to vacation at Disney regularly. In a few years it may also be good for people who just like to vacation to apartments worldwide. The latter is what sells the Marriott timeshare. All timeshares work for people who have the money to splurge on a luxury item. Those who finance are in a more tenuous position. Only you can say how tenuous your position is.

 

[crisi]

but.....DVC doesn't report on your credit report....so......

And not disclosing it on your loan papers would be fraud.....so.......

Seriously, fraud is illegal. Not disclosing material liabilities while you are getting a mortgage is fraud. Recommending that someone commit fraud is not good.

On the house thing, people have given great advice. Not everyone WANTS a house. Not everyone's ability to buy a house will be impacted by a DVC purchase. Everyone has different comfort levels with debt. But if you really want a house and are busy saving for a house, luxury purchases are only going to delay getting the house - and may make it unaffordable.

 

[maskw03]

We bought before owning a home and don't regret it one bit. It's saving us money on vacations and allowing us to take a family vacation once a yr with our DD. Plus neither of us are in a big rush to buy a house when housing in our area right now is still way over priced and just not stable.

 

[xipetotec]

DH and I have been looking in to DVC for awhile. We were so close to buying when we went to WDW last month, but something the guide said made me question our decision.

As we were going through the tour, he said he was impressed with how much research we did, and asked what website we visit. I told him I have been lurking on a few, but mostly the Dis. Ha, they know you all

Anyway on to the point that made me doubt ...
He was chatting away (it was obvious we wanted to buy so he was just being chatty and chummy more than trying to sell) and said we'd be amazed at how many people don't do their research, but how regarldess most love their decision. He followed with the comment that made me rethink: He said, "Would you believe some people even buy a vacation club before buying a home!" Umm, that would be us, lol. The tone in his voice and the way he said it really made it obvious that he thought doing so was a huge mistake.

DH and I looked at each other, smiled uncomfortably, and then at the conclusion of the tour we told the guide we needed to talk things over one last time. He seemed a bit surprised we didn't sign then, because we were so ready, knew exactly what we were looking for etc. Neither of us said we were those silly renters thinking about buying dvc before a home but we thought we should think about it a bit more.

Is it foolish to buy DVC without first owning a home?

I never thought it mattered, but now it is making me really doubtful because I keep second-guessing our decision when I think back to what the guide said about non-homeowners buying dvc.

Eh ... so I thought I would delurk and get some opinions

Well i for one don't see this as a negative connotation at all. What I would mean that to imply is that people DO put a home on their priority list most of the time. But that doesn't mean it HAS to be you know? Maybe he's pointing out that people love it just that much!

 

[robinb]

Well ... I'm going to be the voice of dissent.

If buying DVC interrupts, delays or handicaps the purchase of a home, then I think it is a bad financial decision.

I believe that in general it is advantageous to own instead of rent. You build equity in your home instead of handing over money to a landlord as well as having certain tax advantages. I'm sure that others can come up with dozens of valid reasons why they don't own a house/condo and maybe you have one of those reasons. But my guess is that you do not because you walked away from the sale in doubt.

FWIW, It doesn't surprise me that DVC members (who love DVC) are recommending that you go ahead and make the purchase. We here on the DIS are so close to Disney and DVC that we often have blinders on. Disney is wonderful! DVC is the best! The fact is that Disney is a luxury, even at the Value resorts. DVC is an even bigger luxury. We DISers also LOVE to spend other people's money! I can't tell you how many times I have read other DIS members try to upsell folks from Off-Site to Value, Value to Moderate or Moderate to Deluxe. Please don't let some of us upsell you to DVC.

 

[Dean]

I think the question is not really whether you own a home but rather what your overall financial situation. I can't say what the intent was behind the statement. It could have been negative in that some do buy inappropriately or positive in that they value DVC that much. Personally I feel DVC is a luxury purchase and no one should buy in if not on track financially otherwise. And I also feel that people should not finance and only buy in if they can pay cash, but obviously many disagree.

 

[BWV Dreamin]

If you purchase the timeshare, then go to try and buy a home, assuming you finance the purchase, this will go against when trying to secure a mortgage. Especially now that the lenders are under much scrutiny. It would be better to wait till you make a home purchase, then finance the DVC. Until your ready, just rent points!

 

[pilferk]

Do you want to own a home?

Are you actively saving toward owning a home?

If yes, How long until you'd like to buy?

If the answer to the first 2 is yes, AND the answer to the third is within the term of the note you 'd need to take out to pay for DVC...I'd say wait. Even if you think you can swing both payments financially...I'd still say wait. Houses can spring unexpected expenses on you, so it's best to be settled in and somewhat replenish the nest egg you likely depleted for your down payment, appliances, moving expenses, etc.

If the answer to the first 2 is no or the the answer to #3 is further out than when you'd pay of DVC, go for it. Just make sure you're comfortable with the payments and the commitment to paying dues, etc.

It's all going to come down to what your personal lifestyle is like and what you can afford. We can all give you our opinions, or tell you what WE did, but that's going to be influenced by our personal situations and lifestyles. We've not walked that mile in your shoes.

 

[pilferk]

If you purchase the timeshare, then go to try and buy a home, assuming you finance the purchase, this will go against when trying to secure a mortgage. Especially now that the lenders are under much scrutiny. It would be better to wait till you make a home purchase, then finance the DVC. Until your ready, just rent points!

To be clear, it's not a negative black mark against you. It will simply count in the calculation of your debt to income ratio.....which you don't want to be too high when getting a mortgage.

 

[BWV Dreamin]

Yes, this will increase the debt/income ratio, and this is what is to be avoided. Secure the mortgage first, then finance DVC.

 

[CoconutCookie]

Thanks so much for all of the perspectives DH and I really appreciate it, and it gives us so much more to consider.

We looked in to buying a house, but in our area the prices seem very inflated and we couldn't find anything we would want for what we wanted to pay. A monthly mortgage payment for a home with no more (and in some cases less) square footage would cost about 2.5 to 3 times what we pay in rent, and to us, that just isn't worth it (I guess we got a really good deal on the rent, or houses are priced insanely high in my area). So, dh and I thought we'd use that downpayment money to pay for a DVC contract. We thought it was a good decision, but we second-guessed ourselves after the guide's comments. I can see the logic on both sides, but am not sure where I fall.

I guess DVC isn't going anywhere (except maybe up in price, lol) and our housing prices may come back to a reasonable level soon, so eh, I guess until we make up our minds 100% it's probably better to pay cash for our vacations and let the money collect some interest.

Thanks again for all of the different angles to think about

 

[linzbear]

Well, you've already decided I think, but throwing in what we did anyway.

We live just outside of Boston, MA - so house prices here are sky high, even with the dip. We bought DVC last February, and will have it fully paid off by next April (so a little more than 2 years on the loan). We're not planning on buying a house until at least then, and we'll be moving out.

If you're planning on going to Disney World, do the quick math. I factored in 1 trip a year in a deluxe, and compared it against the interest that the loan would cost, plus a mild inflation amount (point prices are still rising) assuming it would take 3 years to pay it off.

Turned out to be just about even, and it also turns out we're paying it off a year ahead, and we were able to take 3 vacations with the AP discount, and I also took my mom.

Worse comes to worse, we can always put it up on resale if we need the money for a down payment, and we probably won't have lost anything on it (we bought VWL).

 

[pilferk]

Yes, this will increase the debt/income ratio, and this is what is to be avoided. Secure the mortgage first, then finance DVC.

Again, to be clear, you want your debt to income ratio to be below 36%. That's the "magic number", typically.

IF DVC pushes your DTI above that number, it could impact your ability to get a mortgage, or the terms of a mortgage.

If your DTI is below 36% WITH DVC, you don't really have to give much consideration to it's effect on your ability to get a mortgage as long as your payments get made. Since DVD doesn't report to credit agencies, in that case, it won't effect your credit score at all.

 

[childsplay]

Back when I first started lurking on this boards in 1999 there were quite a few threads about this type of question. One of the responses that still stands out all these years later was one individuals' opinion that you shouldn't even consider owning DVC if you didn't make at least $250,000 a year (And in this persons defense, they weren't trying to be elitest or arrogant, that was just what they thought was necessry)
Anyway, my point is simply that if that was the advice I had listened to we still wouldn't have DVC....of course I must admitt that I never would have even considered buying DVC without first buying a house, but that's my opinion. Stay rationale and keep emotion out of the purchase as much as possible and I'm sure things will work out.

 

[tjkraz]

He followed with the comment that made me rethink: He said, "Would you believe some people even buy a vacation club before buying a home!" Umm, that would be us, lol. The tone in his voice and the way he said it really made it obvious that he thought doing so was a huge mistake.

Ugh! Sounds like a comment my wife would make. Every once in a while she starts a rant about some topic or another and instead of preaching to the choir, she misjudges her audience and it turns into a case of "open mouth, insert foot."

I know that home ownership isn't for everyone, but it probably is right for most people. And unless you're dead set against owning a home, I tend to think that's the wiser purchase.

There are others far more qualified than me to evaluate home ownership from a financial perspective, but here's how I look at it: even having a mortgage today, I find comfort in the fact that someday that mortgage will be gone. If we remain in our current home, it will be paid off before I turn 60. Then I just have to pay for taxes and upkeep.

By comparison, let's say I was paying $850 per month in rent today (I'm just guessing at what's reasonable--my last apartment was $700 / month and that was almost 10 years ago.) With 3% cost-of-living increases in rent, by the time I'm 60, I'll be paying $1600 per month in rent. By the time I'm 70, the rent will be up to $2200. By the time I'm 80, it will be $2900 per month.

That's not how I intend to be using my 401k.

 

[BWV Dreamin]

Again, to be clear, you want your debt to income ratio to be below 36%. That's the "magic number", typically.

IF DVC pushes your DTI above that number, it could impact your ability to get a mortgage, or the terms of a mortgage.

If your DTI is below 36% WITH DVC, you don't really have to give much consideration to it's effect on your ability to get a mortgage as long as your payments get made. Since DVD doesn't report to credit agencies, in that case, it won't effect your credit score at all.

That is assuming they finance thru Disney.....if they take out a loan from anyone else, yes it will show up on the credit report.

 

[vwlvette]

You cannot compair the two, a $16-420k purchase to a $150-$?????? purchase. If you can afford it, do it. Home ownership is not in everybody's plans. Without renters there would be no landlords!! and I would be unemployed!!!! lol

 

[vwlvette]

Need spell check!! compare & $16 - $20K purchase.