Buying a house as a freelancer or small business owner? Here’s what you need to know about getting a mortgage for small business owners.

If you work for yourself or run a small business, and you’re ready to buy a home, you’re not alone.

These days, more people are choosing to become small business owners, freelancers, and entrepreneurs to make extra money on the side. And, while you may once have heard that becoming a homeowner is impossible while self-employed, fortunately, that outdated idea is a thing of the past.

Buying a home when you’re self-employed or an entrepreneur may be slightly different than going through the process while working a 9-to-5, but it’s definitely doable. Read on for our no-nonsense guide on what you need to do to get approved for a loan:

1. Prep your financials first

Showing a strong financial history is key to convincing lenders that you’re reputable when applying for a loan.

Unfortunately, that statement goes double for those of us who are freelancers or self-employed. Like it or not, banks view the variable nature of entrepreneur income as a big risk.

As a result, we often have to work harder to show them that we’re a safe bet.

There are a few key points that financial institutions look for when evaluating self-employed individuals. By doing the right prep work beforehand, you can make sure that you put your best foot forward:

Tax returns

Normally, lenders require you to show two years of W-2s when you apply for a pre-approval.

Since business owners aren’t given W-2s and are often trying to buy a home with 1099 income proof, they’re asked to show two years of tax returns instead.

That said, in order to present yourself in the best light, you’ll want your returns to be as high-net as possible — even if it means taking fewer deductions than usual.

Banks look at your net income when making their determination, so showing the highest possible number will make you seem like a sure(ish) bet.

Debt records

When getting pre-approved, your debt-to-income ratio is the second most important piece.

You can figure out yours by dividing your monthly recurring debt (credit cards, student loans, etc.) by your monthly pre-tax income.

To be approved, lenders will look for a debt-to-income ratio that’s between 36%-43%. If your current ratio is higher, it’s important to work towards paying down your debts until you fall within an acceptable range.

Proof of assets

Your prospective lender will also need statements for the last 60 days from all your assets. Assets include things like bank accounts, IRAs, 401Ks, and other investment accounts.

The more assets you can show, the better.

If you can, make an effort to put money aside each month, so that you’ll have a sizable cushion to fall back on when work is slow.

2. Work with a local lender

When you’re a self-employed, big banks and lending institutions may not be the way to go when you feel like you’re ready to buy. The reason is that these companies typically have strict corporate standards regarding who they can approve for a loan.

As someone who’s self-employed, you may ultimately require a bit more flexibility.

In that case, a smaller, local company may be a better fit. Local lenders typically have more ability to make their determinations on a case-by-case basis. They also may have a greater wealth of applicable options to show you, including portfolio loans, where your debt is held in-house for the entire length of the loan. If you’re looking for recommendations, Open Listings works with a network of trusted, top-rated local partner lenders.

However, for the best results, timing is key.

You may want to look into forming a relationship with a local bank before you’re ready to apply for a loan. If they know you and have an ongoing relationship with you — either by holding your bank accounts or other debts — they may be more willing to work with you when the time comes.

3. If necessary, consider a co-signer

Finding a co-signer may not be the most attractive option for self-employed individuals, but when your sole income is not enough to get approved, it may be the most practical solution. In this case, you’d ask a trusted person such as a relative to take on an equal share of responsibility for the loan with you.

Keep in mind: this is a huge ask. You’re essentially asking someone to tie their finances in with yours and to bail you out if you ever default on the loan. You’ll want to choose someone who’s financially stable since they’ll also need to qualify for the loan. You’ll also want to make sure that it’s someone with whom you’re sure you can have a workable, ongoing relationship.

That said, since even the closest relationships can hit rough patches, we highly recommend that you and your co-signer also draw up a private agreement between the two of you. Outline what should happen if you ever find yourself unable to make a payment and any other applicable details of your agreement.

This article originally appeared on OpenListings.

Creating an emergency fund is one of the smartest financial gifts you can give to yourself. Here’s how to build an emergency fund even when money’s tight.

Family expenses, cable, and internet bills, debt and rent, they all play an intimidating role when we start planning on saving for an emergency fund, mainly because it seems like every penny of our income is already accounted for.

Nevertheless, creating a strong reserve of cash can be a great tool to achieve financial peace of mind in case something unexpected happens.

1. Address your debt properly

Saving may not be a consideration for someone who is struggling to get out of debt, especially with high-interest obligations, like credit cards. In this scenario, it may be wise to pay down balances first, as fast as you can. After this, you´ll have more ground to start planning an emergency fund.

Now, if you have handled your credit well, and your balances are low, you can start saving for an emergency fund while taking care of your credit obligations.

3. Make a budget

Making a budget is the only way to have a better view of your financial situation, this control will allow you to know which aspects are more prone to cuts. Easy things, like start bringing lunch to work, riding a bicycle or using public transportation to get to work can represent cuts that will allow you to have more income each month.

If you are responsible enough and commit yourself to make sacrifices, you can see positive results in a matter of weeks. You just need to enhance your budget making skills, and the internet is a good source of online tools that can help you enhance your budget-making skills.

4. Create short term goals

Daily expenses and debt may seem like they leave no room to put aside a large amount of money for emergencies, but that’s not what’s important. Getting started is what really matters.

It is important to see things realistically. Set achievable goals for the short term. The key is to start little by little no matter what the amount is. A small goal can be attempting to save $50 or $100 monthly, the important thing is to start building a good financial habit that can provide help during a financial emergency.

5. Set up automatic transfers

You need to be aware and make use of the tools out there that can help you save more consistently. It may happen that you want to start saving towards an emergency fund, but every time money comes in you forget to save or you don’t have the time and you just spend the money. Automatic transfers can help you with this problem.

If your employer does have direct deposit you can actually set a small portion of your salary and it will go directly to your emergency fund. That way you can save and you won’t even notice, the money will be there in case something unexpected happens.

6. Open a savings accounts

Since emergency funds are created to be there for emergencies, it makes sense that they remain available to be used when you need them. In that sense, locking funds up in high yield savings accounts that will charge a fee if you withdraw the money may not be the best idea.

Check with your bank and see what options they have that can also help you with this process. Money market accounts are a good option here.

7. Make more money

Boosting your earnings will give you more room to easily save up for emergencies. This means that you need to look for other sources of income like flexible side jobs. Right now a lot of people are finding ways to make money fast and the best way to generate additional, free money is through doing your due diligence on ways to earn a reliable side income online.

It’s no secret that the use of a credit card can provide some convenience when you do not have cash on hand or wish to charge a purchase to a card.

In fact, credit card balances carried from month to month continue to inch up, reaching $420.22 billion in late 2018, according to NerdWallet’s annual analysis of U.S. household debt.

That’s an increase of about 5% over last year. The average U.S. household with credit card debt has an estimated $6,929 in revolving balances or balances carried from one month to the next, the analysis found. Even if you have found the best credit card for you, you still may not be using it right.

Is it really possible that people just do not understand how to use credit cards?

This is hardly a secret, but every day people still ask questions that imply they don’t understand how to use their credit card effectively. Whether you have millennial debt or baby boomer debt, it’s all the same. Here’s how to pay it off.

How to Pay Off Debt: 4 Strategies That Work

1. Pay Your Credit Card Balance Each Month

For starters, you should pay off your credit card balance each month. Carrying a balance on your credit card will result in paying more interest charges on that balance. By paying your balance off each month, you can avoid the finance charges the card issuer will apply.

This is especially important if you have a high-interest rate. The higher the interest rate, the more you will pay in accumulated interest. Also, depending upon your balance, if you make only the minimum payment, it can take years to pay off that balance. An important thing to remember is that just because you have the ability to purchase an abundance of items with a swipe of a card does not mean you should.

Always pay your statement balance in full, every month, without exception. This is how you turn a miserable 24.99% APR card into a 0% APR card, for free and for no hassle.

2. Be Knowledgeable about Financial Terms

Some key balances that you should be knowledgeable of include:

The Statement Balance is the amount you need to pay by the statement due date in order to avoid charges on interest. As you get closer to the end of the billing cycle you may notice that pending charges haven’t posted to your account balance yet. Don’t worry about those – the only transactions that matter as far as interest goes are the ones included in your Statement Balance.

The Minimum Balance is the amount you need to pay to avoid late payment, but paying only this amount will result in interest being charged.

The Current Balance is the amount of all the charges that have posted to your account since the beginning of the billing period and when you pay your bill. Some of the charges included in the Current Balance may be for purchases made after the previous billing cycle ended.

If you are planning on using your credit card the correct way, APR is not a concern for you since you will be paying off the balance at the end of every month. If you are not going to use it correctly, and carry a balance past your statement due date, you should seriously reconsider using a credit card for purchasing things.

Click the following link to see more financial terminology you should be aware of.

3. Use Your Credit Cards Wisely

Using your credit card wisely sounds simple, yet so many people fail at it. Here’s how to brush up on your credit card using skills via some examples:

Here is a good example of how to use a credit card:

• Mrs. Jane Millennial has a 22% APR credit card with a billing cycle from August 01 – September 01.
• During the month of August, she decides to purchase items costing $1000 on her VISA card. Her VISA statement for August is issued on September 02, and the statement balance of $1000 has a statement due date of October 02.
• Mrs. Jane Millennial used her card strictly for things she could afford, so she can pay the full $1000 due immediately.
• She makes the $1000 payment the day after her statement is issued, well before the statement due date. Her statement balance is $0, and she avoids interest in the Aug/Sept billing cycle.

Here is a bad example of how to use a credit card:

• Debtor Bob has a 24% APR credit card with a billing cycle from August 01 – September 01.
• During the month of August, he rings up $1000 of charges on his card. His statement for August is issued on September 02, and the statement balance of $1000 has a statement due date of October 02.
• Debtor Bob didn’t use his card strictly for things he could afford, so he can only pay $500 by October 02.
• He pays the $500 he can afford on October 01. On October 02, the remaining $500 is assessed interest in the amount of (24% / 12) * $500 = $510. The unpaid $500 in addition to $10 of interest remain on his statement balance for the next billing cycle.

4. Take Advice from the Experts

According to some of debt success stories, some of the most common ways to beat debt include:

1. Make more than the minimum payment.
2. Pay off debt with the highest interest rate first.
3. Talk to your credit card companies. See if they can help you in any way.
4. Never close cards with existing balances. This will negatively affect your credit score.
5. Move your debts around. Perhaps you can consolidate your debt and get a lower interest rate.
6. See what you can liquidate to lower your debt.

Ready to Pay Off Your Credit Cards?

Don’t fall into the habit of carrying credit card debt. It can destroy your finances very quickly and, unlike payday loans (that even those who take one out seem to realize they’re a bad idea), credit card debt is not treated with the degree of caution it needs to be treated with.

In 2020, you can even pay your rent with a credit card! Although if this credit card balance is not paid off each month you might need to learn how to pay off credit debt fast.

More people should start building start financial habits and not carrying a balance is an excellent way to avoid high-interest rates. If you’re interested in further improving your personal finances consider increasing your income with our post on how to make $700 fast!

What are the Pros and Cons of Guaranteed Universal Life Insurance? Today, we are are going to expound more on the basics surrounding Universal Life Insurance (GUL).

Guaranteed universal life insurance (GUL) is meant to last your entire life and to offer your beneficiaries a significant payout once you join your ancestors. Unlike term life, GUL will remain in force as long as you continue to pay the requisite premiums. With GUL, there is a guarantee that your premiums will not increase at any given point and the death benefit will not decrease.

GUL policies are for people who are ready and willing to commit to ongoing premium payments. Before you purchase this kind of policy, you need to have the financial capability to pay the premiums. So, anyone with an unstable career might not be the right candidate for GUL.

Typically, guaranteed universal life insurance is purchased to cater for your final expenses. It is also meant to provide your spouse and kids with finance after you die. Additionally, the policy can assist in the payment of estate taxes. They also have living benefit riders, which offer compensation while you are alive in case you develop with critical or terminal illnesses.

In this piece, we are going to expound more on the basics surrounding guaranteed universal life insurance (GUL).

What is Guaranteed Universal Life Insurance?

Guaranteed universal life insurance is a kind of permanent life insurance policy whose premiums remain the same regardless of the performance of the market index. The policy’s interest rates are included with the premiums right from the beginning. This kind of policy offers a no-lapse guarantee. This, thus, means that your coverage holds as long as you continue to pay your premiums. Also, there is little cash value growth, and the premiums remain level throughout the entire life of the policy. So, your policy will not have any cash value that you can pull out. And for that matter, there is nothing to back up the death benefit if you stop paying the premiums. If you keep on paying your premiums, your death benefit will not decrease at all.

Features of Guaranteed Universal Life Insurance

There are unique features associated with GUL that anyone interested in this policy should know. Such features are highlighted below:

• Level Premiums. Premiums for GUL are guaranteed to remain the same throughout the policy term. This means they will not increase at any given time, but you have to continue making timely premium payments or you cause your policy to lapse.
• Limited or No Cash Value. GUL is not meant to accumulate cash value like the traditional universal or whole life insurance. Although there are a few instances of cash value accumulation with GUL, they are quite uncommon.
• Coverage to Specified Age. GUL offers coverage to a specified age. For instance, you may choose a GUL policy for different ages, such as 90, 95, 100, 110, and 121. As the age bracket goes up, GUL premiums also increase.

Pros and Cons of Guaranteed Universal Life Insurance

Even though a term life insurance policy will offer a guaranteed level premium and a guaranteed death benefit, this is only for a limited period. Most people end up outliving their term life policies, which eventually takes them back to the drawing board to look for a new policy when their health conditions have worsened. To avoid such frustrations associated with the term life policies, you should consider purchasing a guaranteed universal life insurance policy. Explored below are the tiptop pros and cons of guaranteed universal life insurance:

Pros

• It has a very simple policy design. Unlike other permanent life insurance products, GUL is simple and easy to understand.
• Premiums are level for your lifetime. You are going to pay the same premium throughout the time of coverage.
• The unpredictability of interest rate does not affect your premiums. Sudden market changes or fluctuations do not affect premiums.
• Less-expensive as compared to other forms of permanent life insurance. Guaranteed Universal Life Insurance is cheaper than traditional universal and whole life insurance.
• There is no market risk. This means the policy will still perform as usual even if the interest rates get affected.
• Flexibility when it comes to selecting the age guarantee. This may range from 90 to 121 years of age. The longer the guarantee age, the higher the premiums.

Cons

• Little or no cash accumulation. This is quite different from other universal life insurance products. Any cash buildup is used to maintain the leveled premiums but not a significant amount that can be cashed out.
• Premiums are higher as compared to term life insurance.
• To maintain a guaranteed level premium, you must be consistent and be able to make on-time payments.
• In case you cancel your policy before its expiry date, fees or surrender charges might be imposed.
• Inflexible. With certain life insurance policies, you can adjust your premium and death benefit. But GUL is not one of these flexible life insurance policies.

How Does Guaranteed Universal Life Insurance Work?

Nowadays, GUL is becoming a very reliable option for life insurance shoppers. The reason is that it offers you that great opportunity to get lifetime coverage at a greatly reduced cost as compared to other permanent life insurance products. Other forms, such as whole life and universal life insurance products are expensive than GUL.

GUL is similar to term life in the sense that the premiums are low and lasts a lifetime. It costs more than term life policy, but not as much as the traditional life insurance policy. GUL policies provide lifetime coverage as long as you choose the maximum coverage length.

To people seeking lifetime coverage, GUL is the best bet. But before you consider buying the GUL policy, it is good first to understand how it works. GUL is indeed a very simple product for anyone to learn about. It operates just like a term life policy providing guaranteed premiums and guaranteed death benefit. What makes GUL different from term life is that you can customize the coverage periods to suit your personal needs. In short, you can structure it to last various ages, such as 90, 95, 100, 105 and 121.

Again, the premiums are guaranteed and will never change as long as they are paid on time. Unlike other permanent life insurance products, GUL policies are not meant for cash value accumulation. The only cash build-up in GUL policies is used to maintain the level premiums and is not a significant amount that you can pull out cash from.

Why People Opt for Guaranteed Universal Life Insurance

There are certain reasons why GUL is becoming more popular:

• Simplicity-GUL is a straight-forward life insurance product you can ever get. Remember some of the permanent life insurance products are very complex. Examples of products with a lot of complexities include whole life, variable, universal life, and indexed universal life. With GUL, you only need to pay your premiums, and you will be covered for the age you applied for.
• Customizable. You can customize your GUL policy to the specific age you want. For instance, if you select age 121, there is a guarantee you have lifetime coverage.
• Affordability. GUL is quite affordable as compared to other permanent life insurance policies. Those extras contained in permanent life insurance are what lead to an increase in the premiums of the traditional universal and whole life insurance policies.
• No Market Risk. With regular universal policies, the final payout can be affected by the unpredictability of the market. But with GUL, it does not matter how interest rates or market do.
• Level Premium Payments. As a policyholder, you know exactly what your monthly premiums are. When signing your policy, you have to choose the age to which it will run. Typically, most companies provide GUL coverage for ages 90, 95, 100, 105, 110, and 121. You will pay the same amount of premium until you die or decide to cancel your policy. But with regular permanent policies, the coverage cost may increase over time.

How to Apply for Guaranteed Universal Life Insurance

The mode of application is the same as that of term life insurance. Before filling out the application form, you need to liaise with an independent life insurance agent. You need to look for an agency with access to multiple life insurance carriers to help compare prices of these products.

Is Guaranteed Universal Life Insurance Worth It?

If you compare GUL rates with term life rates, it is evident that GUL is a bit expensive. But remember it is common to live beyond 85 years today. This has been necessitated by the advancement in healthcare and diet, which have improved people’s lives. If, for instance, you outlive your term policy and want to purchase a new policy at 85, you will have limited choices. So, GUL is worth the cost if at all your main goal is to have life insurance for the rest of your life. But if you need protection for short term, then term life insurance is a better option.

While the task of finding a home for your tiny home may seem silly, it’s also an important part of the process. We will take a look at some of the best tiny home communities in the US.

The average cost of a residential home in the United States is $200,000. At the other end of the spectrum, the cost of a tiny home can range anywhere from $25,000-$110,000.

For those of you who haven’t heard of tiny houses, here’s what you need to know. Tiny houses are typically no more than 500 square feet and can be built either on a trailer or on a foundation. People love them because they’re cost-effective, and encourage the homeowner to focus more on the things that really matter in life (family, friends, hobbies–you get the picture).

Now, before you head off to buy yourself a tiny home, it’s important to read the fine print. It isn’t necessarily easy to find a place to put your tiny house. In fact, there are a number of laws regarding tiny homes that need to be considered before downsizing. While the task of finding a home for your tiny home may seem silly, it’s also an important part of the process. Let’s take a look at some of the best places in the U.S. where you can build your tiny home according to Whippio.com.

1. Spur, Texas

Known throughout the tiny community as the “first tiny house friendly town in America,” tiny homeowners here are allowed to build any type of tiny they choose. While most counties state a minimum square footage, Spur allows you to build as small as you like!

2. Fresno, California

Fresno is the first city in the country to approve tiny houses on wheels in residential neighborhoods. While there are still building codes you’ll need to adhere to, this city is certainly on its way to becoming a hotspot for tiny houses. The close proximity of Yosemite National Park is also a huge plus!

3. Green Bridge Farm, Effingham County, Georgia

Known as one of the more popular tiny house communities in the fifty states, this organic farm allows residents to live in organic farmlands surrounded by nature. A plot of land for a tiny house on foundations at Green Bridge Farm comes with an approximately $50k price tag.

4. Union Mills, North Carolina

This is another tiny-friendly location that doesn’t have a size limit. With beautiful mountain views and the beach only a day trip away, Union Mills could be an ideal place to call home.

5. Pima County, Arizona

Pima County allows tiny houses built on foundations in any zones that allow “detached single-family dwellings.” The county has taken huge steps forward in supporting the tiny community by waiving certain building codes to accommodate tiny houses. Additionally, the dry, Arizona climate is a great location for a tiny home because there is a lower risk for mold. (Tiny homes are particularly vulnerable when it comes to mold because of the production of vapor from cooking and showering).

The Takeaway

Although not fully accepted everywhere, tiny houses are well on their way to becoming the future in affordable housing options. Whether you’re a digital nomad, a family of two living in Bloomington apartments, or newlyweds looking to become first time homeowners; tiny living is a lifestyle that can be adapted to suit your needs.