Many businesses have seen the worse from the economy during this pandemic. Businesses, big and small alike, have closed their doors permanently. Those that used to earn millions of dollars in revenue have seen their sales plummet to single digits due to strict quarantine protocols. Overall, America’s GDP fell by a stunning 32.9%, and about 30 million Americans have lost their jobs due to the pandemic. Many wonder how they can get through this disaster.
Ultimately, those within the low-income bracket (households that earn $48,000 annually) are considered to be in danger when a disaster like the pandemic hits. Their assets are at risk, especially when they can’t find ways to finance them. However, there are many creative ways to keep yourself afloat during disasters. These ways can help you keep your assets without putting anything at risk. If you are part of this low-income bracket, here are some ways you can protect your assets during the pandemic.
Getting A Reasonable Mortgage
One of the most essential assets that low-income owners have in the US is their homes. A house is essential to shelter their families against disasters, and it can also be their lifeline. Some low-income earners in the US have barely any emergency funds to keep them afloat for three months. If you have found yourself in this situation and have mortgages to pay for your home during the pandemic, consider these ways to get yourself an affordable mortgage.
Refinancing Your Loan
This might sound counter-intuitive, but if you have a good credit history for the last few years, you might want to consider refinancing an old loan you have from your trusted bank. Refinancing a loan means revising a previous loan to your advantage. This means that you get a new loan on top of your old one, but with better payment rates. Depending on how your bank works, you might even be able to change how you pay the loan. Moreover, if you refinance when there are low-interest rates, you might be able to get more out of your loan.
However, there are a couple of caveats for this plan. One of which is that you’ll have to go through paying the same loan you had before. This means that even if you have an advantage in paying for the loan and the time you have to pay for it, you still have to pay it no matter what. If you already have loans that you haven’t paid yet as of the moment, consider finishing paying those before refinancing any of them. It’s best to refinance when you have no outstanding loans with your bank.
Another caveat is that your position right now might only be temporary, but your loan will be with you forever. There might be some situations where you see your loan’s payment rate is ridiculously low, but remember that this depends on how much you want to pay every collecting period. If you plan to pay for your loan during an extensive period, then you’re going to be paying until retirement. This could also mean being in debt until the day you die. It might be a harsh reality, but make sure that you can get the right balance when you refinance your loan.
When you refinance your loan, you might be able to get enough money to keep your family afloat during the pandemic while you search for more permanent solutions. You can keep your home and other assets from this new loan. This is important if you’re short on money to pay for any of them right now.
Housing Loan
Housing loans are essential for every low-income earners. It is one way they can get a reasonable mortgage rate that is specific to their income values. It is also one way they can get the best out of their mortgage during disasters. The Federal Housing or FHA Loan is a mortgage given by FHA-approved lenders. This particular loan is meant for low to moderate-income earners. These loans are subjected to low payment rates with a minimum downpayment. It’s also available for individuals with low credit scores. So almost any household is open for this kind of loan. If you do get this loan, you can particularly pay for other assets you need to keep aside for your home. But remember that this is primarily meant to keep your home, so be careful where you spend this particular loan.
Starting A Business
It might be the last thing on your mind, but starting a business right now subjects you to some benefits you might otherwise not have if you don’t have a business. Additionally, if you have a business right now, don’t consider closing it yet.
Having a business gives you a chance to get a commercial loan. Commercial loans are loans given to individuals with a business and a decent credit score. A commercial loan could help you pay bills that you might have right now and assets you want to keep. If some of your personal assets are part of the business, you can pay for them too with the use of this loan.
Another benefit you have if you currently have a business is access to the Small Business Administration’s (SBA) loan benefits. Some loans found from this organization can vary, from $75,000 to $1 million, depending on what you currently need. The loans also have low-interest rates, so you shouldn’t worry about paying for them for the rest of your life.
Here are some ways you can use loans to protect your asset when you’re a low-income earner. Remember that getting all the loans listed here is unwise. Before you get a loan, make sure you calculate your financials appropriately before applying to any of these loans. If you think you can pay for them for the given amount of time or until the pandemic ends, then it’s worth getting at least one.