Advertising
Advertising

Ten Brilliant Ways to Become A Homeowner When You’re Broke

Ten Brilliant Ways to Become A Homeowner When You’re Broke

If you feel stuck in an apartment or a rental house because all your money is going to rent. The good news is that there are awesome programs out there that let you break the chains holding you down as “tenant” and allows you exchange that title for “homeowner”.

Purchase Your Dream House With a USDA Loan

First introduced in 2014, this loans purpose is to “improve the economy and quality of life in rural America” They allow you to borrow the entire purchase price with no money down and USDA loan are not just for areas filled with fields and green pastures. They are available in smaller towns with traditional neighborhoods throughout the United States.

To find out more about where these loans are available in your area, visit the USDA government website. You will find information regarding approved areas based on your city and state. You can also find out specific income eligibility for your area.

An FHA Loan Requires Little Down and Protects You From Buying a Money Pit

Although FHA Loans require an affordable down payment (usually 3.5 to 5 percent down) they do not have area restrictions like the USDA Loan. As long as the house is in good condition, there is a good chance it will qualify for an FHA loan.

Advertising

One advantage of an FHA home loan is the FHA inspection. It is more comprehensive than the normal house inspection and can point out defects that must be fixed prior to the loan closing. The thorough inspection can help you avoid buying a money pit.

The VA Loan is Not Just For The Active Military

VA Loans require no money down. You are able to negotiate closing costs by asking the seller to assist by paying these costs for you. This means that you can become a homeowner with virtually no money.

To qualify you must meet certain income and employment guidelines. You also must meet the requirements for military service or be the spouse of someone that qualifies. Talk to a VA-approved lender for more information.

Consider a Loan Assumption

Some loans, such as VA and FHA loans are assumable. Although assuming a loan has not been a popular option for several years, they will gain in popularity in the future. Why? Because right now no one needs to assume a loan due to the low-interest rates. But as interest rates rise in the future, assuming a loan at a 3.5% interest rate when current rates are 6% will be very appealing.

Advertising

The downside with this type of mortgage, is that it may require a larger amount to be financed if the seller has a significant amount of equity in the home. Still, they are worth keeping on your radar.

Purchasing the House You Rent (Lease to Own or Land Contract)

If you are renting a house and want to buy it you may want to talk to the owner about a Lease to Own or Land Contract. This type of purchase is perfect for anyone that wants to purchase a house, but doesn’t quite have the downpayment needed, or is in the process of rebuilding credit (such as after a divorce or bankruptcy).

Typically, a Lease to Own requires a small down payment and an agreement regarding how much of the rent payment will go, towards purchasing the home.  You and your landlord will also agree upon how long the rent to own period will last. After that time expires, you apply for a mortgage to complete the purchase. This allows you to apply for a mortgage, when you have more chance of approval, after rebuilding your credit.

A Navy Federal Loan is Not a VA Loan

The Navy Federal Credit Union is similar to the VA Loan, but the funding fee is less than VA funding fees. Typically, all military funding fees can be financed so this is also a 100% financed loan that requires no money down.

Advertising

The Navy loan is only available to members of the Navy Federal Credit Union. Admittance to this credit union is more strict than a normal credit union and the most common members are military personnel. However, this membership is extended to some family members of military personnel, some civilian employees of the military and employees in the U.S. Department of Defense.

Mortgage Insurance Makes Up for Missing Downpayment Funds

If you are willing to pay Private Mortgage Insurance (PMI), many mortgage brokers work with lenders, that will allow you to put down 10 percent instead of the traditional 20 percent. These loans have advantages and disadvantages.

An advantage is less money down and the ability to drop the PMI once you own 20 percent of your home. The disadvantage is the additional payment that is tacked on to your normal mortgage payment. This amount can be as much as 10 percent of the mortgage payment.

Private Mortgages.

If you know someone that is willing to back you on your home purchase, they can purchase the home on your behalf and then become your lender. This scenario can be a win-win. You get that home you had your eye on and they get paid interest on the amount they let you borrow. You can also avoid PMI when going this route.

Advertising

Many first time home buyers, find this type of assistance with parents and grandparents who have the funds to pay cash for the home.

If It’s Your First Home You Are in Luck With First-Time Home Buyer Programs

There are many first time home buyer programs out there. A simple internet search will return a plethora of programs. There are local programs, state programs and federal programs. There are also programs offered by individual banks and mortgage companies.

These programs vary in the amount of assistance they offer. For more information on first time home buyer programs in your area contact a local mortgage broker.

Credit Union Financing is Available to Most

If your local bank says no to a mortgage don’t take that as a final answer. Many credit unions have less stringent guidelines for qualification on a home loan. Credit Unions also often offer home loans with as little as five to ten percent down.

Before giving up, check with your local credit unions for program specifics and eligibility requirements for their home loans. Many credit unions only require a deposit account for membership in their credit union.

To find out more about these programs and other ones that could be an option for you, contact a local mortgage broker. You may be closer to owning a home than you think.

More by this author

Missy Yost

Missy enjoys decorating, capturing the beauty of her surroundings on canvas, and making new friends. She shares about lifestyle tips on Lifehack.

20 Definitions Of Success You Should Never Ignore 15 Amazing Places in the U.S. You Should Go For A Warm Christmas Five Smart & Cheap Ways to Stage Your Home to Sell Ten Brilliant Ways to Become A Homeowner When You’re Broke 10 Myths About the Human Brain

Trending in Money

1 How to Use Credit Cards While Staying Out of Debt 2 How to Use Debt Snowball to Get out from a Financial Avalanche 3 How Personal Finance Software Helps You Get More Out of Your Money 4 The Best Ways to Save Money Even Impulsive Spenders Can Get Behind 5 How to Answer the Tough Question: What are Your Salary Requirements?

Read Next

Advertising
Advertising
Advertising

Last Updated on March 4, 2019

How to Use Credit Cards While Staying Out of Debt

How to Use Credit Cards While Staying Out of Debt

Many people will suggest that the best thing to do with your credit cards during these tough economic times is to cut them up with a pair of scissors. Indeed, if you are already in huge debt, you probably should stop using them and begin a payback strategy immediately. However, if you are not currently in trouble with your credit cards, there are wise ways to use them.

I happen to really love my credit cards so I will share with you my approach to how I use mine without getting into deep financial trouble.

Ever since about 1983 when I got my first Visa card, I continue to charge as many of my purchases as possible on credit. Everything from gas, groceries and monthly payments for services like my cable and home security monitoring are charged on credit. Despite my heavy usage, I have maintained the joy of never paying any interest fees at all on any of my credit cards.

Advertising

Here are some tips on how best to use your credit cards without falling into the trap of paying those nasty double-digit interest fees.

Do Not Treat Credit Cards as Your Funding Sources

Too many people treat their credit cards as funding sources for major purchases. Do not do this if you want to stay out of trouble. I use my credit cards as convenient financial instruments so I do not have to carry around much cash. In fact, I hate carrying cash, especially coins. When you buy things on credit, the purchases are clean and you will not get annoying coins back as change.

I do not rely on my Visa, MasterCard or American Express to fund any of my purchases, large or small. This brings me to my golden rule when it comes to whether I will pull out any of my credit cards either at a retail or online store.

Advertising

I never purchase anything with my credit cards if I do not have the actual cash on hand in my bank account.

If I really cannot pay for the item or service with cash that I already have at the bank, then I simply will not make the purchase. Remember, my credit cards are not used as funding sources. They are just convenient alternatives to actual cash in my pocket.

Make Sure to Always Pay Off Balances in Full Each Month

The next very important part of my overall strategy is to make absolutely sure that I pay the balances in full each and every month no matter how large they are. This should never be a problem if the cash has been budgeted for my purchases and secured in the bank. I have always paid my full balances each month ever since my very first credit card and this is why I never pay interest charges.

Advertising

Using Credit Cards with Rewards

Most of my credit cards are of the “no annual fees” type, including one MasterCard on a separate account I keep at home as a spare in case I lose my wallet or incur any fraudulent charges. However, I do use a main Visa card which does have an annual fee because all purchases on that card reward me with airline frequent flyer points. For me, the annual fee is worth it since I do travel and I get enough points to redeem many free flights.

You have to decide for yourself if you will charge enough purchases on credit each year without paying interest charges to warrant a credit card that rewards you with airline points (or other rewards). In my case, the answer is “yes” but that might not be the case for you.

I occasionally use a MasterCard or American Express card on small purchases just to keep those accounts active. Also, I have been to the odd retailer that accepted only a certain type of credit card, so I find that having one from each major company is quite handy. Aside from my main Visa card which earns the airline points, the rest of my cards are of the “no annual fees” variety.

Advertising

So this is how I use my credit cards without getting into any financial trouble with them. This strategy is recommended only if you are not in debt, of course. In fact, it is worth keeping in mind once you’re out of debt so that you can keep your credit cards active and treat them responsibly.

What are your credit card usage strategies? Let me know in the comments — I’d love to hear what methods you use.

Featured photo credit: Artem Bali via unsplash.com

Read Next