couple at a timeshare
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A timeshare can provide an inexpensive way to own a piece of property. The cost of a timeshare depends, in part, on whether you buy it from a resort agent or an owner looking to sell his stake in the property.

First, though, you need to know how a timeshare works. Having a better understanding of the process allows you to find the best deal for your budget.

How a timeshare works

The concept behind a timeshare rests on the principle of shared ownership of a property. Instead of buying a vacation home outright as the sole owner, you buy a share of it. You then share use of the property with the other people who have an ownership stake. This allows you to own a vacation home without buying the home on your own. The amount of time you get to spend in the home each year depends, in large part, on how much of a share of the price you pay on a monthly basis.

The different types of timeshares

When purchasing shares in a timeshare, keep in mind that there are different types of timeshares.

  • Deeded timeshares: When you buy a deeded timeshare, you actually have part ownership in the property. The best thing about a deeded timeshare is that you own it forever and can leave it to your heirs. You can also rent or sell your interest in the timeshare at any time.
  • Leased timeshares: With a leased timeshare, you are leasing the property and never take actual ownership of it. Usually, the lease runs for a certain period of time, allowing you to use the property for the percentage of the year that corresponds with the share amount you have in the property. When buying a leased timeshare from another owner, always make sure to check how much time, in years, is left on the lease.
  • Licensed timeshares: A licensed timeshare requires you to join a vacation club. As a member of the vacation club, you get a certain number of points to use for timeshare rentals throughout the year. This allows you to stay at any property that the vacation club owns. You’re limited only by timeshare availability and the amount of money you want to spend.

Timeshare use periods

When buying shares in a timeshare, you have some basic options when it comes to how much time you get at the property every year. Fixed-week timeshares allow you to use the property for a specific week each year. A floating week timeshare allows you to use the property at any time during the year it’s available. A flex-time timeshare is similar to a floating week timeshare, but with some restrictions tied to the high and low seasons at the resort.

Looking to buy a timeshare? Bankrate can help you find the best personal loan for your needs.

The cost of owning a timeshare

The average cost for a timeshare is about $20,000. You must also keep in mind that there are also annual maintenance fees to pay, which can range from a few hundred dollars to a few thousand dollars, depending on the location of the timeshare, its amenities and the type of resort it is. One thing to keep in mind with maintenance fees is that they rise over time.

Other common timeshare fees

In addition to your monthly payment for the timeshare and the maintenance fees, timeshares have other fees. You may be assessed a fee for major repairs or improvements made to the resort property where the timeshare is located.

If you decide to sell your interest in the timeshare, you might pay a transfer fee and a recording fee to the resort.

Use Bankrate’s calculator to figure out how much house you can afford.

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