Little Money Solutions For Home Ownership

Today I have a guest post from Phil Georgiades. Phil Georgiades is the CLS of V.A. Home Loan Centers, a government-sponsored brokerage specializing in V.A. Home Loans. He has been a practicing real estate professional for 22 years. To apply for a VA loan, click here! I hope you enjoy!

Have you ever wanted to buy a home but then changed your mind after you saw how expensive they are? If you did, then you’re not alone. In fact, according to a report from the Urban Institute in 2018, the homeownership rate for millennials was about 37%, which is 8 points lower than baby boomers and generation X at the same age. 

This lack of homeownership is due to a growing concern by new potential homeowners that they might not be able to afford it, resulting in the dream of homeownership being just that, a dream. However, there are ways to become a homeowner without burning a hole in your pocket, and that is by using government-guaranteed loans. 

There are three government guaranteed home loans, which are sure to make homeownership more accessible for people who are concerned about upfront costs. These loans are Federal Housing Administration (FHA) loans, U.S. Department of Agriculture Home Loans, and Veteran Affairs (VA) Home Loans.

FHA Home Loans

The first and perhaps more accessible of these home loans are FHA loans. These loans have proven time and again to be great for first time home buyers because they offer incentives like a low 3.5% down payment requirement. This requirement is lower than the usual conventional loan down payment of 20%.

In addition to the low down payment cost, FHA loans are also incredibly adaptable as to what credit scores they are willing to accept with a score as low as 580, you can still get you approved for an FHA home loan. Keep in mind, some lenders are ready to take lower credit scores, but they might require that you make a higher down payment.

FHA loans are also known for their low monthly and closing costs, the latter which can be covered by the seller in some cases. Also, if you’ve had the misfortune of declaring a chapter 7 bankruptcy in the past, you can still apply for an FHA loan. The only thing is that there needs to be a two year period from the time you initially declared bankruptcy.

The U.S. government guarantees FHA home loans, but they are lent out by qualified lenders. One such lender is FedHome Loan Centers, which does not charge any fees to the borrower since their prices are paid off by the investor.   

VA Home Loans

If you are a veteran, an Active Duty Service Member, or the spouse of a service member who is either missing in action or diseased, you might qualify for a VA home loan. This loan is one of the best available due to its $0 down payment and low monthly payment benefits. 

In addition, VA loans offer some of the lowest interest rates available, as well as no mortgage insurance premiums and no prepayment options. All of these benefits only require that you meet the eligibility requirements, which include:

• You served either 90 days active duty during wartime or 181 days active duty during peacetime.
• If you’re a member of the national guard or a reservist, you must have served for at least six years.
• Qualifying as the surviving spouse of a service member, must have passed away while in the line of duty or from a service-related disability. 

Furthermore, VA loans which already have an excellent reputation, just got a little better. As of January 2020, the VA has removed their loan limits. Allowing borrowers not to be limited by their county’s loan limit, but instead dictated by their income and ability to make their monthly payments. 

Currently, V.A. Home Loan Centers have a loan limit of $5,000,000, and their team of real estate experts can help you through the home buying process.

USDA Home Loans

It turns out that the U.S. Department of Agriculture, which inspects our food also offers a government-backed home loan. USDA loans are for lower-income earners in rural communities who want to become homeowners.  This home loan offers some great incentives like $0 down payments, competitive interest rates, and flexible credit score requirements. However, there are certain limitations to where these loans can be applied. For example, these loans are only applicable to modest single-family homes that are within an approved rural development area. 

  

The United States Government guarantees all these loans, and, as a result, they protect the lender from loss in case the borrower is unable to make their payments. This extra level of security allows lenders to be more willing to negotiate terms that are more adapted to the borrower’s specific needs and wants. 

Today, millennials are having a tough time entering the housing market. Especially since, according to a study by Student Loan Hero, homes have become 39% more expensive than they were 40 years ago. Hopefully, having information about government-guaranteed loans and their low costs can help in at least partially addressing the issue of homeownership.

Managing Your Money When You Work As A Freelancer

If you’re of the millennial generation, it can often feel as though the world of work and finance are stacked against you. It can feel as though your job never quite pays enough for you to live off. It can feel as though even though your lifestyle is modest and the little luxuries you can’t bear to part with are far from extravagant you keep sinking deeper and deeper into a financial black hole and your credit score is increasingly ruinous. Moreover, it can feel as though you’ll be stuck in the same dead end job forever, unable to progress in your career and earning a wage that means less and less in real terms with each passing year as the landlord inevitably hikes up your rent and inflation pushes the cost of living an inch further out of your grip.

Image by MaxPixel

The good news is that you’re not imagining things. The deck really is stacked against you, especially if you’re from a low income family and don’t have the bank of Mum and Dad to fall back on. Corporate wage repression keeps your wages low to insulate the bottom line of the company that employs you while an exploitative and under regulated private rental sector commands a great and greater proportion of your income in order to keep the roof over your head. As opportunities for career advancement grow fewer and further between, it’s little wonder that many forsake the rat race to take their careers and their finances into their own hands as freelancers. Yet, while freelancing is a great way to reclaim your freedom and make a success of yourself on your own terms, it is not without its financial pitfalls. Becoming your own boss is great, but it is a skill in and of itself, altogether different from the skills you take to the free market that make you a living. Here we’ll look at some money management tips to help freelancers on their way to financial security…

Take steps to improve your credit score

As a freelancer you have the freedom that your friends in the 9 to 5 rat race can only dream of… But you also rarely know where your next paycheck will come from, how much it will be and how long it will need to last you. This can make planning for life’s little emergencies problematic and you may need to rely on financial products like loans or credit cards should something go awry. While you can get decent financial products even if you have a less than optimal credit rating; American readers may want to check out this CashnetUSA review, the better your credit score, the more options are available to you. So, how do you improve your credit score quickly?

A debt consolidation loan may be helpful to you. It will not only make your debts easier to manage by replacing numerous direct debits with one single repayment, it will also improve your credit score as it replaces all of your existing debts. Managing your money as a freelancer is tricky enough without the yoke of personal debt around your neck. 

Get your monthly outgoings under control

When you’re starting out as a freelancer, you’re likely getting whatever work you can in a piecemeal fashion. Some of it will be well paid, some will not. Some of your clients will be reliable, others will have to be chased down for payment. And that’s okay. Assorting the wheat from the chaff and hustling for better work from better paying clients are skills that one develops throughout their freelancing career. Nonetheless, you can mitigate your financial risk by keeping a close eye on your monthly outgoings, especially in your make or break early years. How will you do this? Three ways;

Budget

Budget

Budget!

Budgeting really works so long as you stick to it. Establish what all of your essential monthly outgoings are, establish what you need to live to a reasonable standard and use one of these household budgeting templates. If you stick to your budget, you’ll be surprised at just how easy it becomes to manage your finances, even if your income is sporadic.

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Handling unexpected expenses

Despite your best laid plans, it’s entirely possible that something may go awry and disrupt all of your well managed finances. A leaky washing machine, car trouble, falling roof tiles, whatever the cause, an unexpected yet sizeable expense can prove the ruination of your precarious financial harmony. But if you box clever, you can handle this unexpected expense with aplomb. It’s simply a matter of using the right solutions.

If, for example, you have a significant payday coming from a client who has yet to make payment, invoice factoring may be beneficial to you. An invoice factoring company will give you instant payment for an outstanding invoice for a nominal fee. If you need quick access to cash, it can prevent you from needing to rely on a loan or credit card. If you do choose to use a credit card, take the time to choose the right one for your needs. Choose a card with an introductory 0% interest rate (here are some of the best ones) and make sure you clear off the debt by the time the introductory rate expires. If you’re unable to do this, it’s not necessarily the end of the world. Simply move the debt to a new card with a similar introductory interest rate. You will be charged a small fee but it will be nothing compared to what you save in interest repayments. 

Don’t forget your tax commitments

It’s absolutely essential that you set aside enough of your income to honour your tax obligations for the financial year. An accountant will be your greatest tool in preparing your finances for HMRC inspection but ultimately the responsibility for paying your taxes lies with you. Not your accountant, not HMRC but you. However, a good accountant will usually save you more than they cost!

Finally, be wary of the dangers of overcommitting, especially in your first few months. Sure, you’re hungry to prove yourself and eager to keep the money coming in… But if you burn yourself out the quality of your work, and your reputation, will inevitably suffer. 

Do you have any tips on managing money as a Freelancer? Post them in the comments below!