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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.

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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.

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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.

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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.

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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.

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Published on September 17, 2018

How Being Smart With Your Money Leads to Financial Success

How Being Smart With Your Money Leads to Financial Success

Achieving financial success is not something that just happens. Maybe if you win the lottery or something, but for the average person like you or me, it comes from a series of small steps you take over a long period of time.

With each step, you form a new smart money habit. And with each smart money habit, you build towards financial independence.

So what sort of habits can you form to get on that path? Let’s take a look at smart money habits you can start today to get you closer to a financially independent future.

1. Avoid being “penny wise but pound foolish”

It’s tempting to try saving a couple cents here and there when buying small items. However, that’s not where the real money is saved. You’re putting in extra effort for something that doesn’t move the needle.

You get the most bang when you’re able to cut down on your bigger bills. For example, finding a lower interest rate for your mortgage could save you $50+ per month. And cutting your transportation bill by purchasing a cheaper car or taking public transportation can provide large gains as well.

So, look at your recurring expenses such as housing, transportation, and insurance, and see where there’s wiggle room. It’s a much better use of your time than trying to pinch pennies here and there on smaller purchases.

2. When you want something big, wait

Impulsivity can get you in trouble in most aspects of life. Finances are no different.

It’s human nature to see something and want it right then and there. It starts as a kid in the checkout line at the grocery store, and it continues on through adulthood.

We get an idea in our head of something we want, and it’s hard not to go out and get it right then.

A good example is wanting a new car. Perhaps you’ve had your car for several years. It’s crossed the 100k mile mark. Maybe maintenance is due, and you’re annoyed that you need to replace the timing belt or purchase new tires.

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So, you get the itch.

You start digging around online, and you realize you could trade in your current car for something newer and more exciting… all for a few hundred bucks a month. Then you get obsessed.

Here’s where you have to take a step back.

Your newfound obsession is clouding your judgement. Rather than giving into the impulse, wait it out.

Set a timeframe for yourself. Maybe you come back to the decision three months down the road. See if the obsession lasts.

It might, but often, a funny thing happens. Often, you forget about it. And often, you find that the new car wasn’t a need at all.

The impulse faded. And you just saved yourself a ton of money.

3. Live smaller than you can afford

You finally get that big raise. And you want to celebrate – and why not?

You’ve been looking forward to this forever. And after all, it was all due to your hard work.

That’s fine, splurge a little. However, make it a one-time deal and be done.

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Don’t get caught in the trap that just because you’re now making more money, you should spend more.

Too often, people get more money and feel like they that gives them the means to buy a bigger house, a bigger car… you know the drill. Resist.

The fact is that living smaller than what you can afford is one of the fastest ways to build savings.

But if you constantly upgrade as you begin to make more, then you’ll never get ahead. You’ll just build up more debt along the way and have just as little wiggle room as before.

4. Practice smart grocery shopping

Food… it’s one of the biggest portions of any budget. And if you’re not careful, it can be one of the biggest drains on your wallet.

But luckily, there are a few things you can do to ensure that you stay smart with your money when buying groceries.

Create a grocery budget

Set a strict weekly grocery budget. When you know how much you can spend on groceries, you can then plan your weekly menu around it.

Once you know what all you need, you can go shopping and keep a running tally as you shop to ensure you’re on track.

I tend to do this in my head, rounding for each item. However, writing it down as you go would probably work best for most people.

Make a list… and never deviate

Never go to the grocery store without a list. If you go to the store with a ballpark idea in mind, you don’t have a true ide of what you need.

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You’re not well-researched. You don’t know what the sales are. As a result, you’re going to make decisions on the fly.

These impulse decisions will lead to overspending, which will derail your grocery budget.

Eat before going grocery shopping

It’s also important to eat prior to going to the grocery store. Hunger is a powerful force.

If you’re shopping on an empty stomach, everything is going to look good. In particular, you may find a lot of ready-made, processed snacks will look enticing.

After all, you’re hungry now and that food is easily available. So subconsciously, you may lean towards those items.

Unfortunately, not only are those items typically less healthy, but they’re likely more expensive. You pay for convenience.

However, when you eat prior to shopping, then you’ll shop with a clear mind. Your hunger won’t cloud your judgement, influencing you to make poor decisions like a cartoon devil resting on your shoulder whispering in your ear.

This makes it much easier to stick to your grocery plan.

5. Cancel your gym membership

Now that you’re all set on your food, it’s time to get smart about managing your budget in terms of physical fitness. And let’s begin by avoiding the gym. The gym bill, that is.

The average gym membership costs around $60 per month. That’s $720 a year.

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Yet, two out of three gym memberships go unused. That means two-thirds of people who have a gym membership are literally giving away almost a thousand bucks a year. It’s crazy!

I recommend seeking an alternative. One good alternative is to look into fitness streaming services.

Streaming services allow you to stream hundreds of workouts like Insanity and p90x, right in your own home for around $10-20 a month. That’s $40-50 less a month than the average gym membership.

Of course, then there’s the free option. The internet is full of free workouts that you can do on your own with minimal or no equipment.

For example, there’s the Couch to 5K program, that I personally used a decade ago to ease myself from couch potato to running my first 5K race. If I could do it, anyone could.

Then there are free resources like reddit that have limitless information on workouts. The Fitness subreddit has done all the research for you, populating workout tips and detailed workout routines for anyone to use in their wiki.

There are several routines that require no equipment. And you can join in on the subreddit to become part of the community, making it easier for those seeking comraderie and encouragement in their fitness goals. All for free.

It’s baby steps… And baby steps can start now!

I’ve never met anyone that can’t stand to be a bit smarter with their money. And on the flip side, anyone can get smarter with their money. But remember, it doesn’t happen all at once.

Begin by fighting your impulses. Prepare for the week and be smart at the store. And cut monthly expenses like gym memberships that are overpriced and you probably aren’t getting your money’s worth out of anyway.

The devil is in the details. And the details can change your lifestyle and prep you for a financially independent future.

Featured photo credit: Unsplash via unsplash.com

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