How to achieve financial freedom?

Financial freedom is much more than just getting cash. It is the independence to remain who you are and do what you want in life. But achieving financial freedom is not as easy process. By developing specific habits, one can achieve financial freedom.

We all know that money is the only thing which makes the world go round. Financial freedom means self sufficiency or having sufficient savings and money in hand to pursue your enthusiasm, making decisions not affected by your bank account and living on your terms. Financial freedom is much more than just getting cash. It is the independence to remain who you are and do what you want in life. But achieving financial freedom is not as easy process. By developing specific habits, one can achieve financial freedom.

The very first step to achieving financial freedom is figuring out where you are before thinking about where you want to be. List down how much you should save in your bank account, what the lifestyle entails and at what age this will be accomplished and then establish financial mileposts at regular intervals.

 Establishing a written budget and sticking to it is the best way to achieve financial freedom. Try dividing your monthly expenses into three divisions: Essentials, Non-essentials and Junk. Track down your expenses and select categories to prioritize and cut wherever you can.

The next step is to be self sufficient or earning enough to live on your own and being able to provide for oneself. Once you have saved 6 months of your living expenses, you will find enough room to breathe.  Recent research suggests that at this point of time, around 37% of people can handle an unexpected emergency of $1000. Next, you should indulge in saving up a year’s expenses with which you will feel rooted.

While saving up your yearly expenses will give you protection from unforeseen incidents, by saving up your two year’s expenses, you can be flexible with how you want to live. Achieving financial freedom is having sufficient money to protect you for the rest of your life.

Financial independence can be achieved by two ways. One is to save more than a million dollars and then living off the investment interest forever and another is investing in income generating assets like real estate which pay back a considerable amount of money.

Financial freedom cannot be achieved overnight. With each passing year, your financial stress will decrease and your options such as where you live, where you work and what you drive will increase.

Home Buyer Grants and Programs

It may seem daunting to shell out big bucks for your first home, along with a mortgage. Fortunately, there are countless first-time home buyer programs and grants that can assist you to get your foot in the door of home ownership.

Take a look at the 10 first-time popular home buyer programs:

  1. FHA loan: This loan is insured by FDA or the Federal Housing Administration which is ideal for borrowers having low credit scores or only a little money to pay for the down payment.
  2. USDA loan: USDA loan is a loan program which is guaranteed by the U.S. Department of Agriculture and is ideal for low-income borrowers in eligible rural areas.
  3. VA Loan: VA loan is a type of loan which is backed by the U.S. Department of Veteran Affairs for American veterans, military personnel and their families. A VA loan has competitive rates, minimal closing costs, and requires no down payment. However, it requires a low funding fee for some borrowers.
  4. Fannie Mae or Freddie Mac: Loans backed by Freddie Mac and Fannie Mae require a minimum 3% down payment for conventional mortgages which make them ideal for the first time buyers having strong credit but little money for down payment.
  5. Good Neighbor Next Door: This is a HUD program which provides housing aids by providing a discount of 50 percent on a home list price in revitalization areas for pre-kindergarten through 12th grade teachers, firefighters, emergency medical technicians, and law enforcement officers.
  6. Home Path Ready Buyer Program: This is a loan program which provides 3 percent closing cost assistance to the first time buyers to purchase a foreclosed Fannie Mae property who complete a home path educational course.
  7. Energy efficient mortgage: Energy efficient mortgages are backed by VA or FHA a loan program which allows the borrowers to combine the cost of energy-efficient upgrades on a primary loan upfront without a large down payment.
  8. FHA Section 203(k): This is a FHA backed loan which lets the borrowers to borrow funds required for home improvement rolling the cost into one loan along with the primary mortgage.
  9. Local first time home purchaser programs and grants: Many cities and states provide the first time buyers with different programs and grants for closing cost assistance and down payment. These programs generally come with certain income restrictions and have to be repaid once the home is sold.
  10.  Native American Direct Loan: This loan program is backed by the VA loans. This program offer direct home loans to the eligible American military personnel, veterans and their families to purchase, build, or renovate homes on federal trust land.

All you need to know about Reverse Mortgage Loans

Whenever someone thinks and contemplates about life after retirement, the typical issues that invade our mind are adequate economic assistance and absence of monthly salary to take care of health care, living costs and other daily needs. Most senior citizens have a property in their names; however, due to its inherent illiquidity, the same cannot be transformed into immediate and periodic income stream. Each one of these concerns can be taken care of by an idea or concept known as “Reverse Mortgage”

Reverse mortgage in easy words, is the precise opposite of conventional mortgage loans. In mortgage loans, the person pays equal monthly installments (EMI) to the monetary organization fore buying a property. Whereas, in reverse mortgage, the senior citizen who possesses a home or an estate, but lacks a periodic source of income, can leave his estate or mortgage his properties to the economic organization or the financial institution and the economic organization pays back a regular stream of income. Here the borrower (i.e. the person who pledges the estate) remains in the estate until the end of his lives and gets a regular deposit on it.

When the home is pledged, the bank reaches its monetary value on the basis of the property’s demand, current property prices, and the house’s condition. After considering a margin for interest expenses and cost changes, the bank then disburses a loan to the borrower with periodical payments over a fixed time period. The regular payments are also referred to as the inverse EMIs.

House owners above the age of 60 years are eligible to apply for reverse mortgage. If wife is a co-applicant, she should be over 58 years old. The Owners of a self-acquired, self-occupied, housing or flat are only eligible. The titles should be evident, showing possession of the estate by the potential borrower. The property should be free of burdens and it should be the permanent residence of the borrower.

A reverse mortgage loan becomes due when the last remaining borrower dies, or when the borrower chooses to sell the home. In that case, firstly the bank provides the next kin an alternative to settle the mortgage together with acquired value, without sale of the property. If the next kin fails to settle the mortgage, then the bank decides to recover the same from the property’s selling proceeds.

Any additional sum, after settlement of the loan with accumulated interest and costs, through the property sale, is passed on to the legal beneficiaries.

Loss is generally borne by the bank when the sale proceeds get lower than the accrued principal plus interest amounts. This misfortune could occur in situations where the bank’s unique estimation isn’t in accordance with the real estate market value