Timeshares are luxury options for your yearly getaway. Instead of staying at a hotel or paying a property at full price, a timeshare allows you to spend a specific period at a vacation home each year.
If you purchase a deeded timeshare, you’ll have property rights to the unit. However, that also means you have to pay property taxes, maintenance fees, and homeowners insurance. When you choose to finance, there will also be monthly mortgage payments plus interest.
For a place you hardly ever use, the sky-high monthly dues can be quite a burden. Failure to pay grants your management company the right to file for a timeshare foreclosure, The Law Offices of Susan M Budowski, LLC warn. This can cause a major hit on your credit score. Read on to know how detrimental this could be and how it will affect your future credit transactions.
A Lower Credit Score Affects Your Ability to Get Credit
A timeshare foreclosure won’t destroy your credit score forever, but you can expect at least 100 points to be deducted from it. This will have considerable bearing on your ability to obtain a mortgage for several years from the time the foreclosure is completed. You may also experience higher interest rates for future loans or even outright denials. In addition, your existing credit cards are at risk of being cut of closed down.
Remain Current on Other Debts to Improve Your Score
A foreclosure entry will be on your credit report for seven years, but it will decrease as time passes. Stay up-to-date on your other debts to allow your credit score to recover more quickly.
There are heavy legal ramifications to having your timeshare foreclosed by the property developer. Before getting to this situation, consider other solutions such as filing a deed-in-lieu of foreclosure to have your debt forgiven.