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February 12, 2019

Why More Millennials With Student Debt Are Qualifying for Mortgages

student debt mortgageIt used to be that graduating students with large amounts of student loan debt were told to forget purchasing a home until after they’d paid down their debt. Still others were told to wait until they’d built up years of work history, delaying the initial purchase of a home for years. Today, however, more and more millennials are finding it possible to qualify for a mortgage while paying off student loan debt. How?

They Have Good Credit

Credit scores range anywhere from 350 to 850, with anything below 600 considered a poor score. Most mortgage lending programs, even those that are federally funded for first-time buyers, look for scores of at least 620. Those with excellent credit, above about 750, will stand an even higher chance of securing a mortgage with student loan debt.

If your credit score may be an issue, follow these steps to move toward improving it:

● Check your score – you can’t fix your score unless you know what it is. Examine your report and notify the credit bureau of any errors immediately.

● Address any delinquencies – it’s important you address delinquencies immediately. If possible, pay the account off entirely.

● Set up auto-pay – setting up auto-pay features for all your debts will ensure each payment is made on time. Building a lengthening history of paying every debt on time each month makes you much more attractive to lenders.

● Avoid applying for new credit that may go unused – applications are typically a ding on your credit, so even if you don’t intend to use the upper limits of a new card, it may hurt your score.

● Don’t close paid accounts – credit cards you’ve paid off can positively affect your credit score. If you are not using all of your available credit, open, empty credit cards can be helpful.

They Have a Lower Debt-to-Income Ratio

Debt-to-income (DTI) ratio is calculated as your monthly debt payments compared to your monthly income. If you are paying off a student loan in addition to credit card debt, you’ll need a relatively high monthly income to offset the amount of debt you’re carrying. Lenders will focus on your debt-to-income ratio to determine if you can afford another debt – your mortgage – in addition to what you’re already carrying. Paying off credit cards or student loans and maximizing your earning potential can help on both fronts.

You can also consider consolidating debt with a personal loan. If you have a great deal of credit card debt, you likely have a variety of higher interest rates. A personal loan is a stable debt rather than revolving debt like a credit card, and reflects positively on your credit history. You’ll likely receive a lower rate in addition to freeing up available credit.

They’ve Secured Employment in Their Field

Lenders will consider your employment history to determine if you have the steady income required to continue to make mortgage payments. If you’ve recently graduated, you may not have the recommended two years of steady employment. However, underwriters will often consider a move from college straight into gainful employment in your chosen field a substitute for part of your employment history.

They’ve Refinanced or Restructured Student Loans

When lenders look at your debt-to-income ratio, student loans are among the debts they’ll consider. If your payments are unwieldy, consider applying for an income-driven repayment plan through the U.S. Department of Education. These plans consider your income and often provide a lower payment than the typical graduated repayment program. If your income increases, you can increase your repayment to ensure you continue to pay down your loans.

Another solution that can lower your monthly payments is refinancing your student loans. Loans refinanced through banks or other institutions typically carry lower interest rates and lower monthly payments than the original federal loans. As with other loans, you’ll need to consider your creditworthiness, income, and debt-to-income ratio.

They’ve Qualified for Down Payment Assistance

Though the traditional down payment is 20% or more, several programs exist to reduce your down payment in order to speed up the homebuying process for those with student loan and other debt. For example, FHA loans by the Federal Housing Authority offer a much lower percentage – 3.5% for those with credit scores in the 600s and above, and 10% for those in the 500s. HomeReady loans targeted at first-time home buyers offer even lower down payment terms of around 3%.

Find a lender that works with these and other first-time home buyer and down payment assistance programs. Many lenders do not offer zero down payment, but still offer a variety of other loan types that could meet your needs. Obviously, if you have the means to provide a 20% down payment, you’ll lower the principal on your loan, but these assistance programs can put buying your first home within your grasp.

Today’s millennials with student debt are qualifying for mortgages, and chances are, you can too. Overall, pay close attention to your credit score and making your payments on time. Keep your other debt low, and ask your lender about assistance programs that may be available to you. Finally, if you’re in the market for a home, get pre-approved first to see just how much home you can afford. Then, if you find the home of your dreams, you’ll know you can move forward, even while you’re paying off your student loan debt.

Information is provided by Sammamish Mortgage, a Premiere Mortgage Company in Pacific Northwest including WA, ID, OR, CO.

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January 14, 2019

5 Finance Management Tips for New Entrepreneurs

manage your moneyThe reason most entrepreneurs set up in business is, at least partly, to make money so financial management is a crucial skill which all new business owners or would-be entrepreneurs need to learn if they want to be successful.

However, managing finances isn’t always a skill which comes naturally to many. Entrepreneurs tend to be focussed on their big idea and making it a reality, but the money side isn’t necessarily where there energies are naturally directed.

While you can always outsource your finances to a professional accountant to a certain extent, you still need to know and understand your numbers to enable you to spot any issues or trends which you might need to address within your business.

Here are five tips for new entrepreneurs to help with financial management:

1. Record and organise your finances

Whether you are managing your finances yourself or supplying all of your information to an accountant to deal with, it’s important to be organised and keep records of all of your income, outgoings and expenses.

This includes keeping copies of all your receipts, invoices, and any other paperwork related to financial issues, in an orderly fashion. Just putting them all into a shoe box won’t cut it when you are an entrepreneur.

Just using a simple spreadsheet to record income and outgoings can be enough to start with, when setting up a new business, or as the business grows you might need to invest in accounting software to help record all of the financial transactions.

2. Keep track of your credit score

As an entrepreneur you might well need to seek funding for your business either to start it up at the beginning or further down the line to help with an expansion of your services so make you’re your credit is up to scratch.

The last thing you want to do is start a business only to find your credit score or existing level of debt means you can’t get the funding you need to grow the company a few years down the line. Take action to improve your credit score ideally before you start out.

3. Have an emergency fund

While setting up a new business often involves expense rather than profit initially it’s still important to make sure you have money put aside for an emergency – you might need to suddenly buy new equipment or replace a computer for example, so try saving an emergency pot to help take the pressure off.

You can create the fund easily by putting a small amount aside every week so it needn’t be too taxing to save enough to help keep as a buffer. You never know when a client might not be able to pay you or a supplier might go bust so an emergency fund can be the difference between success and failure.

4. Seek professional advice

If you are brand new to business then don’t get daunted or overwhelmed by all of the financial obligations or requirements. If the finance side is beyond your knowledge then don’t bury your head in the sand but seek professional help.

Whether you hire a full-time professional accountant or use the services of a part-time book keeper they can both help and provide expert advice to guide you as you take your business forward as well as looking after the books. You can even make it easier for you by signing up for accounting services offered by companies like Crunch. You can find out how they help small businesses here.

5. Set short-term and long-term financial goals

As well as knowing and understanding your business numbers you should set financial goals for the business to achieve as well. Have short term goals for what you want the business to achieve in the next month, the next quarter and the next year.

You should also have a longer term forecasting tool to predict the income you expect to bring in over the next year to five years, to help make sure you keep your business on track and meet all of your income goals.

As well as your business goals you should also set savings goals which allow you to have enough put aside to pay your tax contributions every year so you don’t get caught out with a big bill at the end of the tax year and nothing to pay it with.

Conclusion

Financial management is a key element to running a business and is a skill which every new entrepreneur needs to learn if they are to be successful in the corporate world. No business can survive if it’s not financially viable.

There are few tips here to help make financial management easier to cope with but if financial management really is beyond your skill set then you should always seek professional guidance and advice to make sure your business can still thrive, leaving you free to focus on the aspects of entrepreneurship where you are strongest.

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January 12, 2019

Borrowing money when you’re retired – Knowing your options

retirement money needThere are several retirees who are of the opinion that they won’t be able to obtain a loan just because they don’t get a salary any longer. Although it is true that it can be tougher to qualify for loans during retirement, yet it is not at all impossible. You must have been saving in your retirement accounts like your Roth IRA or 401(k) accounts but something that you should avoid is borrowing from these accounts. This can have an adverse impact on your savings and also on the income that you fall back on during your retirement. There are several kinds of online loans and offline ones which can save you from a financial setback even during retirement. Read on to know more on this.

Borrowing during retirement – How do you qualify?

When you’re self-funded, lenders will typically decide the monthly income utilizing 2 different procedures which are as follows:

  • Asset depletion: In this technique, the lender will subtract the down payment from the entire and sum total of the value of your fiscal assets and then take 70% of the remainder amount and then divide by 360 months.
  • Drawdown of assets: The regular monthly amount that you withdraw from your retirement accounts in the form of income will be taken into account.

Retiree loan borrowing options

Secured loans are still easier to borrow as you can set collateral against the loan but as long as unsecured loans are concerned, they’re tough for a retiree to borrow as there is no collateral to assure timely payment and hence the interest rates will also be pretty high. Here are few loan options combining secured and unsecured.

MORTGAGE LOAN

The most common kind of secured loan is definitely a home loan which carries your home as collateral. However, the income of the retiree is a major setback, more so when most of your income comes from savings or investment earnings.

CASH-OUT REFINANCE LOAN

When you refinance your existing loan with an amount that is more than what you owe and less than the value of your home, this is called cash-out refinance loan. The extra amount that you make is the secured cash loan. This will also extend the time that it take to repay your mortgage loan.

DEBT CONSOLIDATION LOAN

As the name suggests, a debt consolidation loan is only designed to consolidate debt. It is more like refinancing your current debt. This will mean paying off the debt throughout a longer period of time with lower payments. The new interest rate that you pay may be lower than your present rate or may not be.

PAYDAY LOANS

Anyone including retirees can qualify for unsecured short term loans like payday loans. You may check out websites like www.PaydayMe.com to get short term loans during an emergency when you’re sure that money will come in again with which you can repay the existing payday loan on time.

Therefore, when you’re a retiree who is thinking of ways in which you can fund your emergencies, you can take into account the above mentioned options.

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December 18, 2018

Own a Home, Not a Mortgage

time for no mortgageOwning a home is one of the biggest dreams of almost every adult, especially when they have a family. Mortgage arrangements come in handy to make this desire a reality. Nevertheless, homeowners are left with another big question on their minds: What strategies can I employ to pay off my mortgage as quickly as possible? Well, it is natural to want to be free of any debt commitments, and to know that you own your home and that no one has a claim on it. This is because owning a home will allow you to work on other financial goals, like saving for retirement, saving for your children’s education, and so on.

Paying off your mortgage in a shorter period is not too difficult or unachievable, but it calls for slight adjustments in your payment plan, or changing a few things in your mortgage terms. Here are some things you can do:

Increase the frequency of your regular repayments

The normal terms are monthly payments, but you can choose bi-weekly or weekly payments. Such an arrangement will significantly enable you to save on interest and it will set you free from mortgage sooner than if you only do it monthly. The goal is to make more monthly payments each year without realizing it.

Go for the shortest amortization period and the biggest repayment amount you can afford

Opting for a larger monthly payment, which means it will be paid off quicker, will cause you to consider it as a budget item, thereby shaving several years off your mortgage. While still clearing out your mortgage, a good and consistent mortgage repayment history will enhance your credit score, because mortgage is one of the trade lines (credit accounts) that contributes to your score. You can work with experts to boost your credit score to access more credit at better rates. You need not look further than https://www.boostcredit101.com/ to boost your score and find more advice.

Increase your monthly payment amount when possible

If you have had a mortgage for some time, you have most likely set a plan to make uniform payments each month. It is time you consider increasing the amount, if you can manage. Additionally, if you have experienced an increase in your income, be it from a new job, a pay raise, or any other source, it would be prudent to increase your mortgage payment with the increased income.

Pay lump sum amounts

Mortgage arrangements come with some privileges or additional options that the borrower can use to their advantage. For example, any chance to make lump sum payments should be utilized, especially an annual lump sum payment, against the mortgage. Based on the options you choose for your mortgage, you can pay amounts equal to 10%, 15%, or 20% of the initial principal figure of your mortgage at any time for each year of the mortgage term.

Diversify your mortgage

You need to weigh the various options and choose the mortgage arrangement that offers savings and flexibility.

Conclusion

It is such a relief to pay off your mortgage as fast as possible; thus, you need to work out how to save on other things and repay your mortgage in larger, more frequent payments. Also, you should do lump sum payments when possible.

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December 17, 2018

Liverpool Becoming Buy to Let Hub for Investors

buying propertyOver the past few years, Liverpool has been hailed as a buy-to-let property gold mine. It has low initial costs compared to other UK cities and a growing demand for rental accommodation. Considerable investments from both the private and public sector have been boosting the city’s economy.

Liverpool’s affordable property prices are a huge draw for potential investors. With house prices in Liverpool considerably less than the UK average, developers and investors have been making the most of opportunities in the city. The average UK house price is £215,000 with the cost in Liverpool only £117,000. These low house prices allow investors to get far more for their money compared to other areas like London and Cambridge. Investors have been discovering that for the price of an apartment in London, they could by a couple of comparable quality properties in Liverpool. Prices of property in Liverpool are also on the rise. These increasing house prices are an excellent indicator for investors whose property is worth far more than they paid.

Liverpool has been attracting investors from around the world. With its strong trading history, famous football clubs, and of course, the Beatles, it’s definitely on people’s radar. Investors from the USA, to China to Saudi Arabia are all looking to this northern city as a possible location to expand their portfolio. Developers from overseas are also purchasing land in Liverpool, and working with the city to create new properties. A citywide targeted development strategy has improved areas of Liverpool that were once derelict or underdeveloped. This increased investment has been creating lucrative new opportunities for investors.

Buying off plan is another popular option with investors. Guaranteed rental yields mean that investors see income as soon as the development completes, without having to deal with tenants themselves. Access to new off plan developments is highly sought after, with plans for modern skyscrapers, apartment buildings and purpose-built student accommodation pending. The city’s borders are expanding. Unused land is being snapped up by developers for new projects around the city.

Liverpool has a high average rental yield, with some properties offering returns of up to 8%. This assured income from property is highly beneficial for investors who are generating income while their investment increases in value. It also allows investors to hold on to property, with rental income paying for the investment in years. Properties by RW Invest have rental yields of 7-8% on stunning luxury apartments in the city. High quality, modern apartments with options for furniture and high-end fittings are perfect for buy-to-let investors. Developments like Azure residence, with apartments from £94,950 and Tobacco Wharf with flats from £84,995 both, offer a generous 7% yield.

A recent study showed that 13.8 tenants were trying to get each new rental that becomes available. With such a competitive environment and so much demand, tenants are sometimes willing to spend a little bit more for a city location or a beautiful apartment. With buying their first home still unattainable for many young people. It was recently reported that 44% of private tenants were not expecting to buy in the long term. Improving job prospects are attracting more and more people to live in Liverpool city centre. These are often looking for rental accommodation that is close to the city centre or excellent transport links.

The increasing demand for rental properties and the option of long-term tenants are all factors in Liverpool’s reputation as a buy to let hotspot. With low prices, a growing economy and new developments continually popping up, Liverpool is continuing to attract savvy buy-to-let investors.

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