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Welcome to a new topic area of Impact Hub’s Social media presence: financial wellness. We are here to address questions and/or issues faced by all of us as entrepreneurs. My experiences have shown me that we constantly struggle with finances and money and how to spend it effectively. My mission here is to help give you some guidance and perspective.

Question: How to qualify for a mortgage or car loan?

Part 1’s answer is a little more challenging than the latter.

Getting a mortgage as an entrepreneur is challenging but not impossible. There are government programs that allow for as little as 3% down payment. However, you still need 3%. Another approach if you do not have that 3% and may be still available in some instances, is 100% financing. I did this way back when: I took out a 80% first mortgage and immediately took out a Home Equity Line of Credit (HELOC) for the 20% difference. I had to pay Private Mortgage Insurance (PMI) (required by the bank for leveraging more than 80% of a home’s value). I paid substantial amounts in fees, but I got my house and everything worked out in the end.  

As a struggling entrepreneur, home ownership may be somewhat out of reach initially but a good savings habit will help you in the longer run. What if you answer that you have no money or you can not save.  How about if you start saving with something small? Do you use all your loose change when you pay with dollar bills? This is typically me since I hate to carry loose change around, as it weighs me down. I was able to deposit all my loose change every time into a big container and after some time that small amount amounted to a half filled with quarters, dime, nickels and pennies. There must be a few hundred dollars in that jar.

Another way to save more is perhaps not going out to lunch or dinner as often. I know a few of us cook a week’s worth of food in one shot. Box each meal separately and eat them for the rest of the week. If you brown bag it, you get to save. You don’t have to go to the supermarket frequently and splurge on things not on your shopping list.

Did I mention shopping lists? Yes, that’s another way to buy just what you need and nothing else. Supermarkets strategically place “splurge” items where they’re most easily accessible, like candy or soda at the beginning of the checkout counter… it’s all consumer marketing and psychology on their part. Notice that the next time you visit the supermarket!

I just experienced this recently, buying a car and getting a loan. It’s straightforward to purchase a car, if you get financing from the dealership. On the credit application, the dealership will pull your credit score. As long as you have acceptable credit, the dealer will provide financing if your monthly income is realistic for them to extend you credit. Don’t try to obtain an outside loan since they will need formal income and employment verification. Take the dealer financing and when your income becomes more stable, refinance the loan with another bank if that makes sense.

Most importantly in either case of purchasing a house or a car, you must be able to make monthly payments. A house will be one of your biggest investments in your lifetime, so choose wisely. A car, on the other hand, is a depreciating asset (it consistently loses value).

Be smart about these decisions and it will pay off down the road. Good hunting!

I will be answering more questions in upcoming posts, so stay tuned! Hit me up if you have finance questions in mind and pressing and I can help address them in the very near future