With fractional ownership, you have many options
Question: I was reading an ad for property that seemed quite inexpensive. It was called “fractional ownership.” What is that exactly?Answer: Fractional ownership, sometimes referred to as interval ownership, is increasingly popular among buyers today. But it can mean many things, from sharing a small townhouse in a regional resort, to having an exclusive condo hotel in a vacation hotspot.Typical fractional ownership is one-fifth interest, which equals nine or 10 weeks of annual ownership, usually in a moderately expensive property. Here are some of the other forms of interval ownership that you may encounter: Traditional fractionals: Typically, town houses or two- to three-bedroom apartments of average quality in regional resorts. Owners receive a deeded interest for a limited period of time. High-end fractionals: Larger units, with lower-density, better-quality finishes and furnishings, and additional services in a more desirable location. Private residence clubs: Prime sites in top-tier resorts with lots of amenities. Intervals tend to be longer, with a lower member-to-property ratio to create exclusivity. Destination clubs: Analogous to high-end country clubs, with overnight accommodations in a network of resort homes or properties in prime destinations. Sometimes, membership is deeded to a percentage of the entire real-estate portfolio. In other instances, members are conveyed access to the properties via nonequity, right-to-use club memberships. Condo hotels: Whole ownership of a room or suite that can be used whenever the owner wants and rented by the hotel when it is not in personal use. The hotel takes 40 percent to 60 percent of the revenue, with the owner or owners sharing the rest.Multimillion-dollar market still hot, hot, hotQuestion: I see so many properties advertised that are on the market for a million dollars or more. Are there really that many sales of upper end homes?Answer: Despite a cooling real estate market, one segment that remains red hot is the multimillion-dollar market.Mark Zandi, chief economist at forecasting firm Moody’s Economy.com, says the segment of high-end buyers “won’t be immune from the unfolding travails of the rest of the market, but it will weather those difficulties much better than it has historically.”In San Francisco, 18 homes in that range sold in the first quarter, up from 15 in the same period last year, a DataQuick analysis shows.In Palm Beach, Fla., 10 homes sold for $5 million or more in the first quarter, up from eight last year. And in Jackson, Wyo., 21 homes, up from 17, sold for more than $3 million, according to Jackson Hole Real Estate and Appraisal.Online credit scores often differ from FICO scoresQuestion: I did a credit check online and then found that when my lender did the credit scoring, the numbers were quite different. How can that be? Answer: Credit scores found online are often generics, and significantly lower than the official Fair Isaac Corp. FICO score that mortgage lenders use to gauge how much of a risk a buyer will be.The discrepancy sometimes angers both potential buyers and their real estate professional. “We’re getting a lot of angry conversations about ‘why is your score lower’ than what the consumer got somewhere else? Our members get blamed by their own customers, who are primarily brokers and lenders,” says Terry Clemans, executive director of the National Credit Reporting Association, a trade group that represents hundreds of credit agencies providing consumer reports and scores to mortgage lenders.Fair Isaac itself has become concerned about marketplace confusion over its proprietary scores and a multitude of other scores. Tom Quinn, vice president of global scoring for Fair Isaac, says the company’s own research has documented disparities of anywhere from five points to more than 200 points between FICO scores and non-FICO scores on the same consumer.The disparities exist because the statistical scoring models often assign different weights to the same information, and generate what may be strikingly different numerical conclusions.Did you know? FHA has fixer-upper loansQuestion: Joyce, I found a home I want to buy in Alma and it is a real fixer upper. I have been told that I might not be able to obtain financing. Do you know of any sources for financing for fixer-uppers? Answer: Buyers who want to purchase a handyman special should consider applying for an FHA 203(k), which covers the cost of the house, repairs, and even alternative housing while the renovations are under way.There are two kinds of 203(k) loans: a standard and a streamlined. For a home to qualify for a standard 203(k) mortgage, there must be at least $5,000 worth of non-cosmetic work that needs to be done. A streamlined 203(k) has no minimum, but the maximum is $35,000 in repairs. The streamlined version also allows for a wider variety of repairs and replacements, more cosmetic work and less paperwork.Any HUD-approved lender can offer a 203(k) loan. For answers to your real estate questions, call Joyce or Allison at 970-468-6800 or 1-800-262-8442. Email Info@SummitRealEstate.com or visit their website at http://www.SummitRealEstate.com. Allison and Joyce are both long time locals in Summit County. Summit Real Estate – The Nenninger / Simson Team is located at the Dillon Ridge Marketplace. Their long-time residency and years of real estate experience can help you make the most of any buying or selling situation. Both are Certified Residential Specialists (CRS), the highest designation awarded to a Realtor in the residential sales field. Their philosophy is simple, whether buying or selling, they understand that the most important real estate transaction is yours.
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