Why more people should consider Government Guaranteed Home Loans

A key focus of my blog is Financial Literacy/Money. Most people have to get a home loan to secure a primary residence. A potential tool is a government loan. The following guest post is entitled, Why more people should consider Government Guaranteed Home Loans.

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As the housing price increases every year, many people feel that purchasing a home is becoming increasingly challenging due to increasing demand and lower supply. Even in 2021, when the nation is at the tail end of the biggest pandemic in the last 100 years, the median home price has continued to increase.

Many millennials reaching the age where they want to become homeowners believe that buying a home is becoming more difficult every year. Even during a slowed down real estate market, when mortgage rates are low, there are several banks asking for higher credit scores to qualify for a home loan. Increasing the hurdles that new home buyers must navigate on their path toward homeownership.

Thankfully, Government guaranteed Home Loans are available, and they can make the possibility of becoming a homeowner a reality. These loans offer more lenient eligibility requirements and several other benefits, which are sure to make homeownership a real opportunity for new and returning home buyers.

These Government guaranteed home loans come in the form of Federal Housing Administration (FHA) Home Loans, Department of Veteran Affairs (VA) Home Loans, and U.S. Department of Agriculture (USDA) Home Loans.

FHA Home Loans

These types of loans are beneficial for anyone who wants to become a homeowner. However, it is beneficial for first-time homebuyers looking for a more affordable alternative to conventional loans.

FHA home loans have some of the more lenient requirements out of any home loan available. These include a steady employment history (at least two years), closing costs that can be covered by either the seller, lender, and the borrower’s employer. In addition to these, FHA home loans require a low 3.5% down payment, much lower than the conventional loan requirement of 20%.

Having these lower eligibility requirements is not the only advantage that borrowers could have through an FHA loan. There are also several other benefits to FHA home loans, like lower monthly payments, lower closing costs, and borrowers’ ability to borrow more than the property is worth to finance the repairs and upgrades to a property.

VA Home Loans

VA home loans are the perfect loans for Veterans, Active Duty Service Members, and eligible spouses who want to become homeowners. To qualify for these loans, the applicant must meet its property, income, credit, and military requirements put forward by the VA.

To be eligible for these loans, the applicant must have served for at least 90 consecutive days during wartime and 180 days during peacetime. Members of the National Guard and reservists must have served at least six years. In addition to these service requirements, VA home loan requirements include property, income, and credit score requirements.

After eligibility is determined, the applicant will enjoy some of the best benefits available in any home loan. The benefits include a no down payment requirement, lower monthly costs, no-prepayment penalties, no mortgage insurance premiums, and lower interest rates. By taking advantage of these benefits, the applicant might become a homeowner in an increasingly more expensive housing market.

USDA Home Loans

Both FHA and VA offer excellent alternatives, for people in the lower middle class, to the often expensive conventional home loans. However, the dream of homeownership is not exclusive to people in the middle class, and that is where USDA home loans come in. Loans administered by the USDA are meant for lower-income families that would otherwise not be able to qualify for FHA or VA home loans.

Being eligible for these loans requires that applicants live in a rural development community and that their income is low to moderate. Moreover, the property that is used for the USDA home loan must be a modest single-family home with no extra features like in-ground pools. The home should also not be used for any business purpose whatsoever.

Conclusion

It is no secret that homeownership is a dream for most Americans who work hard to achieve that dream. However, for many who might not be informed about Government-backed home loans, homeownership might seem to be just a dream. Mostly due to the high cost of conventional loans and often unforgiving eligibility requirements. However, by understanding Government loans, borrowers can now qualify for a mortgage on a home and save more money than they would have with regular home loans.

Phil Georgiades is the CLS for FedHome Loan Centers, a brokerage specializing in first-time home buyer loans. He has been practicing real estate for over 22 years. To learn more about programs available to you or apply for an FHA loan. Call us at (877) 432-5626.

Government in the New Age of Disruption

Three focuses of my blog are Current Events, Financial Literacy/Money and Business/Entrepreneurship. In modern times, traditional forms of business have been disrupted by new startups and technologies. What is the government’s role during these paradigm shifts? The following contributed post is entitled, Government in the New Age of Disruption.

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We know of how businesses are being disrupted by start-ups that manage to find a consumer need that has been ignored and neglected by large corporations for years, maybe even decades, and then offering a solution changes the whole paradigm for the entire industry. No longer are the large corporations in charge, deciding on what the consumer gets and at what price he or she can get it. The consumer is now in charge, being able to vote with their wallet who gets their business and who doesn’t.

We’ve seen it in the fall of video-rental services when the consumer decided that streaming is more convenient than the process of getting and returning a VHS cassette. We have seen it in the taxi industry where the consumer decided that hailing a taxi from their phone, have full tracking and no-fuss payment options. Or just look at the banking industry who are on notice with all the waves made by fin-tech (financial tech) start-ups that challenge the way people think about banking. No longer it’s a large organisation with branches and cheque books, it can also be something that sits on your phone and offers your smart integration.

Photo by Ross Findon on Unsplash

Governments

This is all good material for trend watchers, and one might ask him or herself, what about governmental organisations? Is there any disruption going on there? Governmental organisations are the poster boy examples of inert organisations that rely on set rules and procedures to operate well. The whole idea of agility and changing business models are, in most cases, the opposite of what you might want from institutions that are depended on and need continuity. That’s not to say that government organisations are not evolving. Actually, putting the citizen, central has been core to a lot of governmental investment, trying to create better processes that make dealing with governmental institutions easier. In some cases the language changes from citizens to consumers, indicating that they are taking a page out of the for-profit playbook.

Picking up the Pieces

The real work for governmental organisations sits actually on the effects of disruptive industry. One can think about the massive protests and pressures the taxi industry has put on national and local government, citing the unfair advantages companies such as Uber and Lyft have. Or the challenges that legislators face with the pros and cons of the gig economy. You can fire up a pretty intense discussion nowadays with people on both sides of the political spectrum when it comes to zero-hours contracts. Governments are even having to deal with smart services that help you get out of a parking or speeding fine, such as a 22350 VC, beating the government at their own game.

The New Norm

As with the disrupted industries, it’s also the consumer that has organised themselves, letting their voices heard as never before. The same goes for citizens. One can be dismissive of the likes, shares and tweet-culture we are seeing nowadays, stating that in earlier decades people would take to the streets. But that’s missing the point, as the world is moving to a place where the online business is as important as the offline business, or maybe even greater, we should start weighing things up correctly and see that an online movement is the core movement.

A Look at Careers: The Federal Government’s General Schedule Pay Scale and Salaries Revisited

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“When I first moved here, a couple of men told me they had achieved their ‘14s’ when we first met and I didn’t know what that meant.”

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The first principle of my blog is Creating Ecosystems of Success and some of its focuses are: Career Discussions, Education, and Financial Literacy/Money. I originally published this piece in 2015 on the Examiner as I started to understand some of the nuances of being a federal employee. While the employment in the government is relatively stable in comparison to the private sector, there are some other unique differences which I thought were worth discussing. If you or someone you know is considering a federal career, this is a good and insightful read.

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My last article gave an overview of my experience as a federal employee in a general sense. This article will talk about one of the more intriguing parts of being a federal employee; the General Schedule (GS). The GS is particularly relevant when one is looking to get hired into the federal government and it takes on more significance when seeking promotion within one the federal government’s many agencies.

The General Schedule is a payroll scale which dictates the salary of each federal civilian employee. The scale spans from levels 1-15, with 15 being the highest paid and most senior. The only levels higher than the GS are the Senior Executive Service (SES) and then becoming an elected official.

Within the GS some promotions to the next grade are automatic without competition. Within grades, there are ‘steps’ where one automatically gets a raise periodically. There are 10 steps to each grade, and the first four step increases are automatic annually. Afterwards they are every two years. This seems like a really good deal right?

Reaching the GS-14 and 15 levels from the 13 level involves competition. That’s assuming that there’s money in the federal budget or ‘continuing resolutions’ for those promotions to become available in the first place. Another caveat is that one cannot jump to a higher grade without proving that they adequately performed the functions of the grade below it – going from a 13 to a 15 for example. A 13 must first become a 14 before reaching a 15.

While the GS is standard across the board for all federal employees, the cost of living for geographic location varies. For example, a GS-14 in my hometown of Buffalo, NY would make slightly less than a GS-14 in the Washington, DC metro area due to the vast difference in the cost of living.

What does all of this matter? As with everything, it isn’t a perfect system depending on your point of view, and there are pros and cons to working in the public vs. the private sector vs. academia. As described in my Earning a Ph.D. series, ascension within the federal government isn’t entirely dependent on one’s degree level. Having a Ph.D. for example doesn’t guarantee a promotion or even favor within an agency, and there are scenarios where Ph.D.’s can end up being supervised by master’s and in some cases bachelor’s level staff, something that would almost never occur in the private sector or in academia.

“We have Ph.D.’s.!!! We shouldn’t be making the same amount of salary as those filing records or who are doing administrative things,” a former colleague who has since gone to the private sector often lamented. That’s another caveat, tenure is an important component to federal employment. Specifically, there are instances where someone with a lower level of education who has been in the system longer, can make equal or more salary than someone with greater academic credentials who has been the system for less time. Ponder that.

“I wanted to move to Washington DC, so that I could get my 11,” a friend with a background in Human Resources who was a GS-9 said upon moving to the Washington, DC. Because the federal government is centralized in Washington, DC, the opportunities to get promoted are more plentiful there. Likewise, once promotions are achieved, that level is typically maintained wherever one goes afterwards throughout their career.

“When I first moved here, a couple of men told me they had achieved their ‘14s’ when we first met and I didn’t know what that meant,” a female acquaintance shared with me about her early dating experiences in the area. A funny but true and in some ways disturbing aspect to all of this is that in the DC Metro area, your GS-level can have huge social implications. In the minds of some, it represents: power, prestige and status in addition a considerable salary, the latter probably being the most important though they are generally lower than comparable private sector positions.

In closing, none of this information is confidential so I won’t get in trouble for sharing any of this. The salaries of federal employees are readily available to the general public online. Thus, when you know someone’s GS-level, you have an idea of what they earn, unlike in the private sector – an unsettling thought in terms of privacy to some degree. Nevertheless, it’s one of the cons that come along with being a public servant. The bonuses tend to also be more robust in the private sector.

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There are other aspects to being a federal employee such as the Thrift Savings Plan (TSP) which is the retirement plan/system for civilian employees. I will probably discuss it in a subsequent post about retirement as it’s something I didn’t quite understand when I started my federal career.

I’m going to close by going back to stability, but in a different way. In some instances, federal employees may perform at low levels for their given duty for any number of reasons. This likewise can earn consecutive poor ratings at their annual performance appraisals. This is difficult for supervisors because it’s classically hard to fire federal employees as there’s a long and involved process for letting go of them once they’ve passed their probationary period – again something very similar to academia.

Thank you for taking the time to read this blog post. If you enjoyed this one you might also enjoy:

• Perspectives of federal workers caught in the middle of the 2013 government shutdown revisited
• The myth of the stability of being a government employee revisited
• Father’s Day 2018: Dad’s doctor and his lawyer, and a discussion on careers
• Applying School To The “Real World”: Turning Subject Knowledge Into a Career
• Staying Relevant In The Workplace: The Tips To Help
• Common Mistakes When Choosing A Career
• Making The Most Of Your Education

The Big Words LLC Newsletter

For the next phase of my writing journey, I’m starting a monthly newsletter for my writing and video content creation company, the Big Words LLC. In it, I plan to share inspirational words, pieces from this blog and my first blog, and select videos from my four YouTube channels. Finally, I will share updates for my book project The Engineers: A Western New York Basketball Story. Your personal information and privacy will be protected. Click this link and register using the sign-up button at the bottom of the announcement. If there is some issue signing up using the link provided, you can also email me at bwllcnl@gmail.com . Best Regards.

Perspectives of Federal Workers Caught in the Middle of the 2013 Government Shutdown Revisited

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“All we can tell you is to watch the news. We don’t know when this will be over.”

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The following piece was originally published on the Examiner back in October of 2013 during my very first government shutdown as a federal employee. It was followed by another piece which I also recently republished titled The myth of the stability of being a government employee revisited. Five years later after our most recent three-day government shutdown, and with another potential one on the way, I thought it would be appropriate to republish it.

The reality is that regardless of one’s position on something like the Deferred Action on Childhood Arrivals policy (DACA), there are many, many government employees who have bills to pay and can’t afford the uncertainty of having a prolonged break in their income. This piece captured some of the rumblings of those around me leading up to, and during the time we were sent home for two weeks. It turned out to be a paid vacation as we were reimbursed for those two weeks, and ‘Obamacare’ was eventually signed into law – at least for the time being.

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By the time this article goes up, the 2013 government shutdown may be over, or it may still be in effect. No one knows except our elected officials. In the meantime, when writing up the piece about The myth of the stability of being a government employee, the idea recently came to me to capture some of the reactions and sentiments of friends and colleagues in the federal government before and during the shutdown. The following are samples of quotes and reactions to the shutdown from people in my circle.

“All we can tell you is to watch the news. We don’t know when this will be over,” our supervisors and managers told us leading up the shutdown and then on the day we when we went through our shutdown protocols. We all knew that the government shutdown might be coming months in advance so all of this wasn’t a big surprise, though leaving my workplace that last time not knowing when I would return was a sobering feeling.

“We got reimbursed back in 1995 after the Clinton-Gingrich shutdown, but it’s not guaranteed that we’ll get it this time. It’s actually not looking good,” a seasoned coworker said days before the shutdown with a look of fear on his face from potentially losing the pay. It was with good reason too as our bills would continue rolling in even as our paychecks froze.

Immediately after the shutdown went into effect, many federal employees took it hard. While many were worried about the financial pinch, many workers actually found fulfillment in their work, and were upset that they couldn’t work simply because of lack of agreement by our elected officials. Some even became skeptical about continuing to work for the federal government.

“This sucks,” a coworker text-messaged me the morning of Oct. 2, the day immediately after the start of the shutdown. In later messages over the course of the shutdown, his frustrations continued saying, “I’m going to keep my options open employment-wise. It’s just going to get more difficult in the government – more work, lower pay (furloughs), no promotions, on top of the usual politics.”

“When my federal job got shutdown, I knew that I was just go and spend time at my other jobs,” a friend who has his hand in a number of community service and other projects outside of work peacefully stated. While many federal workers were crushed about not being able to go to work, others saw it as opportunity to invest their time in other projects.

“We might get shutdown, but we’ll be back to work eventually. In the meantime, those who have savings will be okay, and those who don’t will scramble to find the money to buy a bag of potato chips. It’ll be okay.” Prior to the start of the government shutdown, some colleagues weren’t worried about it at all. An unconcerned seasoned coworker who was savvy about money and investing smiled and told talked with me about the shutdown in a very carefree way.

Some retired federal employees looked at the current situation with fond memories of previous shutdowns, and made observations about the spending habits of and mentalities of the younger generations of federal employees.

“We never worried about the government shutdowns. We just relaxed and enjoyed the time off,” a retired federal employee laughingly said at an alumni association executive board meeting I’m involved with. “We were a different generation though. We had money saved up and could thus survive. People in the younger generations don’t live like we did and are in real trouble right now. They’re going paycheck to paycheck.”

“I’m filing for unemployment,” a disgusted coworker said walking from the printer the day of the shutdown, when we had to go into the office and officially close down our work stations. He continued, “The director just sent this certificate to all of us. I recommend you print it off and do the same thing.”

About a week later, my unemployment papers were put in the mail as well. Other federal employees congregated around the city to take advantage of the free specials offered by local restaurants. We all watched the news everyday wondering when our elected officials would make some sort of agreement and reopen the federal government.

Thank you for taking the time to read this blog post. In you enjoyed this post you might also enjoy:

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The Myth of the Stability of Being a Federal Government Employee Revisited

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“For those of us who are in the military, contractors and government employees living paycheck to paycheck yet who are still Democrats, to be honest, we NEEDED them to cave. Republicans don’t want the big government anyway. They don’t care if it fails. We need our jobs.”

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The following piece was originally published on the Examiner back in October of 2013 during my very first government shutdown early in my federal career. Five years later after our most recent three-day government shutdown, and with another one potentially on the way, I thought it would be appropriate to republish this.

The opening quote is from a thread on Twitter. Someone took a verbal shot at Senator Chuck Schumer for caving in and ending the shutdown after only three days, and a federal employee responded saying that she needed Schumer and the Democrats to surrender. The reality is that regardless of one’s position on something like the Deferred Action on Childhood Arrivals policy (DACA), there are many, many government employees who have bills to pay and can’t afford the uncertainty of having a prolonged break in their income. When government shutdowns occur, we see that there are instances when federal careers are not as stable as we believe them to be.

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Recently many of my articles have focused on financial literacy. One of the key components of financial literacy is the knowledge of how to generate income whether it be through working a job, entrepreneurship, or wise investment of money already earned. With the government shutdown taking place, quite a few federal employees have been forced to ponder one of the key considerations of working a job; security.

“When we were in college, the government was thought to be the place to be in terms of employment. A lot of people wanted to get in,” a close friend who is also a federal employee and a mother of two with a third on the way said when recently over lunch. “Now things are really different and there is so much uncertainty. People are rethinking whether or not they want to go in or even stay in the government.”

In a booming economy with plentiful tax revenues, a robust Gross Domestic Product (GDP), and when our elected officials are getting along, yes being a federal employee can be a good way to go, so much so that some would say that government employees are treated too well. Prior to 2008, it was thought to be stable employment and federal employees were thought to be relatively safe from the ups and downs of our nation’s economy. On a side note, it has also been said that it’s hard to fire federal employees, and that there are some in our ranks who have lost their desire to produce and are getting paid to do nothing. In that regard maybe some federal employees are treated too well.

When the country is in a recession and our elected officials can’t agree on how to best fund the government, or even to fund it at all, being a federal employee can look a lot less attractive. It is then that you (as have many) realize that you are still at the mercy of someone else; in this case our politicians who interestingly continue to get paid no matter what.
My tenure as a federal employee started in 2008 at the end of George W. Bush’s second term just as the current economic downturn ramped up (the Great Recession).

Though having a steady income while other sectors of the economy were disintegrating around us, federal employees have experienced/ endured:

• A freeze of our annual Cost of Living Adjustment (COLA);
• The uncertainty of ‘Continuing Resolutions’ instead having concrete budgets;
• The 2011 standoff over the raising of the ‘Debt Ceiling’ and the ‘Fiscal Cliff’;
• The 2013 summer ‘Sequestration’ leading to furloughs and;
• Now the 2013 shutdown over ‘Obamacare’ and a potential second showdown over the raising of the Debt Ceiling compliments of the Tea Party.

This series of unfortunate events has shown that federal employees are just as vulnerable to the same economic calamities as everyone else when perfect storms like the one that we’re currently in sets in. It has shown that federal employees are at the mercy of quarreling elected officials. These events have in fact shown that whether you’re employed by the private sector, the government, or an entrepreneur, everyone is vulnerable to something. Lastly though it hasn’t taken place during my tenure, there is also something call a Reduction in Force (RIF) in the government where the size of the workforce needs to be reduced, and federal employees are retained or let go based upon seniority and experience.

No matter what sector of employment or business you’re in, it is once again important to not live ‘paycheck to paycheck’ if you can help it, and to have some money saved up for unforeseen hardships such as this 2013 government shutdown. In his Financial Peace University course, Dave Ramsey calls that having an ‘Emergency Fund‘, or a ‘GOK’ (God Only Knows) fund.

Thank you for taking the time to read this blog post. In you enjoyed this post you might also enjoy:

• Who will benefit from Apple’s $350 billion investment?
• Challenge stereotypes and misconceptions on household income and wealth building
• We should’ve bought Facebook and Bitcoin stock: An investing story
• Mother’s Day 2017: one of my mother’s greatest gifts, getting engaged, and avoiding my own personal fiscal cliff
• Your net worth, your gross salary and what they mean
• The difference between being cheap and frugal

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