Ways to Avoid 20% Downpayment for Home Purchase

When a person is looking to purchase a home they were told that they need to save so they can put down 20 percent of the total price as a down payment. This is no longer the case. With the prices of homes being so high this can be a lot of money to save up and most people do not have that amount of cash to work with. There are other options for people looking to purchase a home that does not have 20 percent of the price for a down payment.

The FHA loan only requires that a person put down 3.5 percent of the total price of the home. They need to have a decent credit score of only 580. If a person has a credit score of 500 they will need a 10 percent down payment. A person will need to have extra free mortgage insurance. There are some restrictions based on the price of the home but it is good for those first time home buyers.

If a person has served in the military they can get Veterans Affairs Loans where they will not have to put any money down. No mortgage insurance is needed. A person will need to show that they have served 90 consecutive days in the military during a time of way or 181 days during a time of peace. People that were in the National Guard or the reserves they had to serve for at least 6 years. If a person was wounded during service they qualify for this loan regardless of how long they served. If a person is a window of a military member that died on duty they can be approved for this loan.

The United States Department of Agriculture offers 0 percent down payments for people that have lower or moderate incomes. A person must be purchasing a home in a rural area. Almost  97 percent of the United States is covered by this type of loan. A person can also go online and check the USDA website to see if the home is in a qualifying area.

If a person belongs to a credit union they may be able to get a mortgage with little to no down payment. A person may also be able to get a lower interest rate. A person may have to meet some income requirements and have decent credit. Some credit unions require that a person have a credit score of at least 750 to get this loan. A person can get 100 percent financing so if they have good credit it may be worth looking into.

These are some ways that a person can get a mortgage for a home without having to put down a 20 percent down payment. The down payment can be preventing many people from owning their home. With these other programs, a person can enjoy homeownership without having to put down tens of thousands of dollars.

The Best and Worst Ways to Use Home Equity

What is home equity? This is simply the difference between your property and the current value of that particular property. To many homeowners, home equity has been one of the most important financial tools. There is a right way and the wrong way before you start funneling funds out of your home. Here are the best and worst ways that you can use to leverage home equity.

There have emerged numerous ways that homeowners can use to get into their home equity. A home equity loan is arguably one of the most reliable ways. People often confuse this loan with a traditional mortgage. Actually, that is the main reason why this type of loan is referred to as the second mortgage. Usually, they are installment loans. What does this mean? Funds are disbursed in one lump sum and later paid back in equal payments. Also, they can be backed by your home equity.

In most cases, home equity has a fixed rate. The rate is a bit higher than the initial mortgage. Line of credit is another popular way that has been used over the years. What is the main difference between a line of credit and equity loan? With a line of credit, you have the full freedom to borrow money any time of the year.

Away from that, you are allowed to pay off your balance the same way as a credit card. Although it is not often, you will be required to disburse a certain amount of money. The best thing about the home equity line of credit is that you are not required to pay extra money. In addition, they provide debit cards to their dedicated customers.

You might have come across cash-out refinance in the past. Cash-out refinance is very different from the secondary line of credit. What does cash-out refinance involves? It is all about refinancing the mortgage for a higher amount of money. You don’t have to take any additional loan with this method. Your overall debt load will increase over time.

You might be aware that home equity is arguably one of the most common uses to invest in home renovations and upgrades. The home value will increase after you improve the facilities. You can easily leverage your home equity if you are an experienced real estate investor. Have you ever took a debt and later exchanged the debt for another asset? Many people make such decisions with the sole aim of producing extra income. There is no doubt that real estate is a risky business. With that in mind, you should consult financial experts before making a decision to invest in this sector. You should keep in mind that it is not always smart to purchase a property simply because you can afford it. It is advisable you partner with an experienced investor.

How to Recession Proof Your Income in this Simple Steps

Experts feel that a recession is coming. There is some way to recession-proof your finances so you can survive the next recession.

A recession is a period when the economy does not grow and this lasts longer than two consecutive quarters. No one is protecting from the recession. A person should have a strong retirement plan with goals to help save their finances. A 25-year-old with an investment plan can survive the recession while a 60-year-old may try to avoid loss.

You should know how much money you are taking in compared to the amount of money you are spending. If you lose your job you need to know how long you can survive on your savings. Some free tools can help you with this information and track your expenses. You can see what you are spending your money on and how to cut in a time of need.

During a recession, you can use your emergency fund instead of high-interest credit cards. You should have three to six months of expenses in savings and you should not use it for anything besides an emergency. If you are laid off you can still pay your bills while you look for work.

After you have an emergency fund set up you should work on paying down your debt. In a time when money is tight, you do not want to pay back high-interest bills. It is recommended that you pay off credit card debt first then private student loans.

You should make sure that you have diverse investments at the risk you are willing to tolerate. If you are older you will have a harder time making up lost money than if you are in your 20s or 30s.

Even the best and most dedicated employees can be laid off during a recession. In 2008, over 2.6 million people lost their jobs. Young college graduates are at the highest risk for layoffs. You should keep your resume updated just in case you lose your job. You will be ready to go and can show your skills to a new employer.

Recessions do happen even in developed countries. The best thing you can do is prepare. Even if the market hits a low spot the worst thing you can do is panic. If you sell your investments you will miss out on the profits when the market comes back up. Recessions can be bad but eventually, things will recover. Not all recessions will be the same but in recent times the recessions have lasted for a shorter period than in the past. If you have a plan before the recession hits you will be able to survive it and things will get back on the right path.

These are some ways that you have recession-proof your finances. Even during tough times, you will be able to make it through with the proper planning.