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The Honest Truth About Van Dwelling: Answers To The Most Common Van Life Questions

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Van dwelling, or the lifestyle of living in a van, is becoming more and more popular as a way to travel full-time. Since we bought a van a few months ago to live in, I have received a lot of questions about van dwelling.

While they seem funny to us now, I know that we had some of these same questions before we started RVing. 

Some of the questions we are asked are from those who think we are crazy for living in a van. Whereas, others are from people who are interested in van dwelling but are unsure about certain things. Either way, I hope to clear up a lot of the common questions we receive about living in a van.

You never know, maybe I’ll convert some of you. 🙂

Below are questions that I’ve been asked by friends, family, readers, and even strangers. It’s always interesting trying to explain RVing/van dwelling to strangers who stop me at the store after they’ve seen me get out of our van.

It’s a lot of fun, though. I love answering questions about what it’s like living in a van full-time and getting others hooked on this lifestyle!

Some of the questions I answer in today’s post include:

  • Are you done sailing?
  • Why not just keep your last RV?
  • Biggest pros/cons of van dwelling compared to boat life?
  • Do you shower everyday?
  • What do you do when you have to use the bathroom?
  • How much does living in a van cost?
  • Is van dwelling safe?
  • How do you receive mail?
  • Why would you want to explore the U.S.?
  • What do you do for health insurance?
  • How do you have internet while traveling full-time?

If you want to follow our travel adventures, please click here to follow me on Instagram.

Related articles on van dwelling:

Here are the van dwelling questions you’ve asked me:

 

Are you done sailing?

If only I had a dollar for every time I’ve been asked this question.

I know some of you are thinking, “You quit sailing to live in van?!”

No, we did not quit sailing! We are splitting our time between van dwelling and boat life. We still have lots and lots of plans with the boat, and we enjoy having it. We are getting back to the boat in just a few weeks and cannot wait!

So then, why did we get a van?

Last hurricane season, we mainly stayed in the marina on our boat. We did several short sails, but we wanted to do something different this hurricane season.

We talked to so many sailors and quickly realized that many take a few months away from their boat each year during hurricane season, and we completely get it.

To have the best of both worlds (in our minds), mountains and beaches, we quickly realized that having a 4×4 van along with the boat is how we achieve our dream living situation.

We’ll mainly be living/cruising on the boat, but we will also be occasionally living in our van so that we can still do all the hiking, biking, and rock climbing that we’ve been wanting to do. We’ve been feeling like something has been missing from our lives, and now we feel refreshed and ready again for sailing! ⁣⁣

We have done a lot of traveling off the boat this summer, for family reasons, a wedding, and events, and van dwelling made traveling everywhere much more comfortable for us and our two dogs.

Also, another positive of van dwelling is that the systems are pretty simple, and there isn’t a whole lot that goes into it. So, it’s less likely that we’ll have large repairs that take up a lot of time and money.

We really wanted it to be as simple as possible. Since we already have a sailboat that is quite complex (compared to a van or RV), we wanted our time away from the boat to be as carefree as possible.

Related: Welcome To Paradise – We’re Living On A Sailboat!

 

Was getting a van planned?

I know some people think we’re nuts for our non-traditional living situation, and I hesitated talking about getting the van until we drove it off the lot because I was afraid of being judged. 

When we sold our motorhome in 2018, we had already planned on living in a van when we’re off the boat. So, yes, this was all in the original plan. And, the van makes us even more excited for our future sailing plans!

For us, we think it will be the best of both worlds – sailing and van dwelling.

We have a lot of outdoor goals that we want to achieve, and a van makes all of them much more realistic. We don’t have to wait until we’re finished boating to do those things, and who knows if and when we’ll ever be finished sailing. Now, we can do both of the things we love!

 

What kind of van did you get?

We’ve been looking at vans for quite some time, and decided to get a Winnebago Revel. This is a four-wheel drive van that also has:

  • Solar panels on the roof
  • A small rooftop AC
  • A very small bathroom (you shower over the toilet)
  • A bed that can be easily brought up and down, which gives lots of space for the dogs
  • A kitchen (again, very small, haha) with a stove, fridge, and sink

It sleeps the two of us and our two dogs just fine. Honestly, we were a little surprised with the space (the layout is PERFECT!), and we have really loved being in it this summer.

No, we did not pay full price or anywhere near it. We’re master negotiators when it comes to vans and RVs, haha. We got the van at a little over 30% off MSRP, which is a normal percentage when it comes to new vans.

Sadly, I do know of many people who paid full price for this same van! In fact, I know of people who have bought this same van used for a higher price than what we bought it for new. We got such a good deal on it that we are still scratching our heads on why and how it happened.

 

Do you actually like van dwelling?

Yes!

We are willingly living the Sprinter van life, haha!

Our van is 19 feet long, which surprisingly isn’t much longer than your average vehicle at around 15-18 feet (yes, we measured other vehicles because our family became curious as a joke).

Many people even make jokes about living in a home with wheels, like it’s something you shouldn’t aspire to.

“Living in a van down by the river” – I have heard that so many times now, haha.

But, it’s my life, and I really, really love it!

Here are some of the things that I love about van dwelling:

  • I love the freedom. Whether you’re living in a van, an overland vehicle, a big motorhome, or anything else, living in a vehicle gives you a lot of freedom. You can choose where you want to live, and you can mix it up and change it all the time. You can also decide how long you will stay somewhere and travel however you want. Perhaps the city is for you? Or, maybe you just want to hike all the time! Whatever you decide, it’s about living your life the way you want.
  • I love having all of my stuff with me. I really enjoy traveling in a van because I can travel to tons of amazing places and bring everything I have with me. While that may sound like I’m a hoarder and may have suitcase packing problems – it’s really just that I like to be able to bring my husband, dogs, my work, my clothes, food, outdoor gear, and so on with me. Van dwelling just makes sense for me because I can easily bring everything wherever I go. And, it’s more than just going on a vacation, which is nice too, but I love being able to bring my entire home with me. This way, I’m not forgetting anything, and because my home is always with me, I still get to live comfortably.
  • I can spend more time outside. I’m much more active than when I lived in a “normal” house, and I believe that’s because living in a vehicle takes me to all of these amazing places that I am just dying to explore. We love being able to do things outdoors, and we usually pick places that make that even easier. So, we like to park next to hiking trails, bike trails, rock climbing routes, and more. This is great because we can usually just walk or ride our bikes to wherever we want to go, which allows us to spend a ton of time enjoying the beautiful outdoors.
  • I can easily travel with my dogs. A major reason for why we chose to live in a van was because we, of course, had to bring our dogs with us. They are a part of our family. By traveling via van, our dogs can go everywhere with us. While it would be possible to travel full-time with them and not live in a van, I think it just makes it easier on everyone to have a place to call home. 

 

What do you not like about van dwelling?

Living in a van isn’t perfect. If it was, then everyone would do it!

  1. We can only carry so much water (21 gallons). So, long showers aren’t really possible.
  2. We have a very small fridge. In a van, you can’t have a residential fridge.
  3. We don’t have a washer/dryer. Since we’re really active outdoors when we’re in our van, that means we have lots of dirty clothes!

Those things aren’t really negatives, though, as there are ways around all of them. You simply fill up water more often, go to the grocery store more, and have to visit a laundromat.

 

 

How’s van life compared to the big RV you used to have?

Before we started boating, we lived in an RV for several years. Our previous RV was a Tiffin Allegro Bus, which is a big diesel pusher. It had heated floors, a fireplace, a residential fridge, a bathroom bigger than the one in the house we used to own, 4 TVs, and more.

When you think RV, you probably don’t think of the one we used to have (although, it’s actually quite common in real life!).

Our van is much, much smaller. For example, our WHOLE fridge is smaller than the freezer in the RV we owned.

But, the van is great because we are able to get in to some amazing places due to its smaller size and it being 4-wheel drive.

One of my favorite things about living in a smaller vehicle is that we can pull the van in to places that most vehicles can’t get to, and then comfortably sleep and eat there!

 

Why not just keep your last RV?

Right before we bought the boat, we sold the RV. Some of you are probably wondering why we didn’t just keep the last RV we had, especially if we knew that we were planning on living in a vehicle when we weren’t on the boat.

We didn’t want both a big boat and a big RV – we didn’t want all of the maintenance that goes along with a big RV, we didn’t want a big RV just to be sitting there for months without being used, and the cost difference is fairly large. We also sold our last RV for nearly what we bought it for, so it made sense to get something that better fit our new situation.

We also wanted to be able to pull up to all the amazing trails that we are used to exploring, and since we are only doing it for a few months each year, we don’t need anything massive. The boat is still our “main” home, so living in a van is simply something we do during the boating off season.

 

Biggest pros/cons of camper van life compared to boat life?

I know that everyone wants me to tell them which one is better, but they are so very different that it would be impossible to answer it that way.

Both van dwelling and boat life are both great. They are both very similar, but also drastically different with certain things.

The biggest pro to van dwelling/RVing is that it is a much easier way of living and traveling than being on a boat. The degree of ease/difficulty isn’t even comparable between the two.

RVing/van life is also great because you can drive straight to the best hikes, bikes, climbs, and sleep right there. While it’s possible on a boat, it’s not nearly as easy to access all of the wonderful land adventures that the world has to offer.

Boat life is great, though, because you’re on the water, it’s more eco-friendly since you can make your own water, tend to have more solar, can use the wind, and sailing is a ton of fun. Boats can also bring you to amazing islands and allow you to access more water-based activities. Sailing is very rewarding because it pushes you to learn really fun and new skills.

I think we will always do both for as long as we can as they allow us to do different things.

 

How long will you stay in the van for?

We will be back on our boat in just a few weeks. We will be heading to the Annapolis Boat Show in October and then going to the boat right after that.

 

What will you do with your van when you’re on the boat?

Our plan for now is to store our van when we’re not using it. So, in about a month, we will be tucking her in until we want to use her again.

Here’s an option if you have an RV that you’re not using full-time – How To Make Extra Money By Renting Out Your RV.

 

Do you shower in your van?

Yes, we shower. We have a shower in our van dwelling. I use soap, shampoo, and everything else. I shower pretty much the same way I would at home.

See, our water tank only holds 21 gallons, and since we do a lot of off grid camping, I have to take a lot of short showers.

We even get hot water because we have a water heater. Now, it’s not always the most relaxing shower, but I am still able to shower.

 

Do you shower everyday?

No.

Yep, I’m super gross.

I shower pretty much after each outdoor activity I do. But, if it’s an uneventful day and there’s not much water, I’m probably not showering.

And, when I do shower in the van, I have become the master of the one gallon of water shower.

I do brush my teeth like normal, wash my face everyday, and so on. That hasn’t changed at all.

 

What do you do when you have to use the bathroom?

We use it.

Haha! For real, we have a toilet in our van, so we use the bathroom, just like if we were in a “real” home.

It’s only different in that you have to dump it.

This is often one of the first questions people have about van life 101.

 

How/what do you eat?

We make food in our kitchen. We have a very small table, fridge, stove, and a slow cooker. We are able to cook just as if we were at home.

Yes, our kitchen is tinier, but it works well for us.

We try to keep our meals to something more simple, as cleaning a lot of dishes just means that we’ll quickly go through our water tank. We also only have one stove burner, so we try to only use the stove top or the Instant Pot.

 

How much does living in a van cost?

As I answered in How Much Does It Cost To RV?, RVing can be extremely cheap or it can be very expensive. It’s the same for van dwelling.

We paid for our van in cash, so we don’t plan on having many other costs that go along with it, except fuel and insurance (we did go ahead and prepay for a year of insurance). Of course, we’ll still be paying for food, cell phones, and other normal expenses.

One of the big reasons for why we chose the van is because it is small and can get almost anywhere. That also means that we can park for free in more places, such as family and friend’s driveways, boondock wherever, and more.

You can read more about this here – How To Camp For Free, Even In Beautiful and Desirable Places.

 

Is living in a van safe?

Yes, I believe that living in a van dwelling is safe. We’ve never really felt unsafe while traveling in our van.

We hardly ever park in cities and are almost always either in the backcountry or in someone’s driveway (it’s our favorite way to visit family and friends!).

 

Can you live in a van with a family?

I recommend reading this van life guide to living in a van with kids – How This Couple Does Van Life with A Baby (and a dog!).

Also, this one – Becoming an RV Family – How We Travel Full-Time With 4 Kids and 2 Dogs.

 

How do you do laundry in a van?

Interestingly, this is one of the top questions I get about living in a camper. I could probably write an entire van life guide just about laundry because of how interested people are in how we wash our clothes.

Yes, we do laundry!

We either use a campground laundromat or find a public one.

It usually takes us less than an hour to do our laundry and less than $10. We do our laundry around once per week.

 

How do your dogs do in the van?

We chose the Winnebago Revel because we thought it would be perfect for our dogs, and it is!

Our bed retracts up, so it is completely out of the way when we’re not sleeping in it. We use the area below the bed as a sleeping space for our bigger dog. Our smaller dog has his own area as well.

They also get to go on lots of hikes and walks and explore lots of amazing places.

The van easily stays climate controlled, so that is great for our dogs. We have an AC for when it’s really hot, and we also have a great van fan (if you don’t have an RV, then you probably don’t know what this is, but it’s simply a really, really good fan). We try to follow good weather as much as we can, so that the temperature is nice for our dogs.

 

Do you hate each other yet after living in such a small space?

One of the most common things about full-time van dwelling that we hear from others in relationships is that they think they couldn’t do it because they might end up hating their spouse.

We live in less than 100 square feet, and we’re still doing great!

We are just fine with the small space and it’s never really gotten to us. Sure, there are times when it rains all day and you can’t go outside, but there are always other things to do, such as read, work on the business, and just relax.

 

What do you do for a living, so that you can travel full-time?

This isn’t a common camper van life question that I receive from readers as you all know what I do! However, I hear this all the time when I’m on the road or when I bump into someone in person.

This is a question that is always funny to answer, because many don’t think you can make money while traveling. However, you can!

I make my living entirely online through my blogging business. Here are helpful articles to read:

 

How do you receive mail?

We belong to a mail forwarding company called St. Brendan’s Isle. All of our mail gets sent there, and then they forward our mail to wherever we are.

For example, the other day I knew I would be at my sister’s, so I had all of my mail shipped to her house. St. Brendan’s Isle puts it all in one tidy package and ships it to where I’m staying.

This is one of the top things that stops people from traveling full-time, and I just find it funny. It’s so easy to get your mail so please don’t let this stop you!

 

Where do you like to sleep in the van?

I’ll be honest and say that we are not usually huge fans of RV parks. There are some nice ones out there, but we don’t like to be packed in the middle of a bunch of RVs, which is how most RV parks are.

If we do stay at an RV park, we like to make sure that we have a view, where at least one side of our vehicle backs up to something awesome, such as the ocean, desert, mountain, etc.

This is why we prefer campgrounds at state parks, national parks, and so on, because you get a much better view and a little more space.

For the most part, though, we are camping for free in the backcountry. This is our favorite way to sleep while living in a van full-time as you can get a ton of space all to yourself, you can see the beautiful night sky without any light pollution, and it’s great for exploring.

You can read more about this here – How To Camp For Free, Even In Beautiful and Desirable Places.

 

Can you just park anywhere you want?

Hardly a week goes by without someone saying that we should visit them and that we can park in their driveway, some random lot next to their house, inside their garage, and so on and so on.

I always laugh – you can’t really just park anywhere in your RV or van. RV and camper van life isn’t that easy!

There may be rules and laws against RV parking in some cities on public streets, there may not be enough space, the space might not be level, there can be low hanging trees, or there may be a 9 foot bridge to drive under.

There are plenty of places to stay, though, so for the most part you won’t have a problem. We have stayed in people’s driveways (Google Satellite and Street View are your friend in these cases), free public land, RV parks, state parks, national parks, and everything in between.

However, we always make sure to research where we are going so that there are no difficulties.

 

Why would you want to explore the U.S.?

This is my least favorite question and it honestly makes me want to scream.

BECAUSE IT’S FUN.

The U.S. is full of awesome landscapes and there are so many beautiful and fun things to see here. Just take a look at some of my Instagram photos for proof.

 

What do you do for health insurance?

Learning about health insurance options is part of van life 101 – and unfortunately, there are no realistic options. I didn’t want to pay the penalty for not having health insurance, and I also didn’t want to go uninsured.

For full-time travelers, it is difficult to find health insurance companies that will cover you.

Some health insurance companies won’t cover you once you travel out of your state. If they do offer out-of-state coverage, they usually require that you at least live full time in your home state. While we do have a home state and address, it isn’t technically where we live full time. So, it was important to find a health insurance provider that wouldn’t possibly void a medical expense if they found out that we were trying to get around this loophole.

Plus, the only policy that we qualified for (in our state) had an astonishingly high deductible of $39,000 for out-of-state medical expenses. And, as full-time travelers, we are excluded from the majority of policies anyways due to the loophole described above, so that just didn’t work for us.

Paying a high monthly health insurance premium that comes with a $39,000 annual deductible, and the fact that many of our claims would probably be voided, made this decision a no-brainer.

So, in January of 2016, we started a membership with Liberty HealthShare. For the both of us, we pay just $249 each month.

With this monthly fee, 100% of our eligible medical bills – up to $1,000,000 per incident – are covered after the $1,000 per couple annual unshared amount (think of this as your annual deductible).

Now, belonging to a health sharing ministry is not perfect. Liberty HealthShare is not traditional health insurance, which means:

  • They are under no requirement to cover your medical expenses.
  • You cannot deduct Liberty’s monthly costs from your business taxes.
  • You cannot contribute to a Health Savings Account.
  • Pre-existing medical conditions are not covered until years later.

Health care sharing ministries all have some sort of ethical rules that you must abide by, such as no smoking, no drinking, and so on. If you incur a medical expense due to something that is against their policies, there is a chance that they will not cover it.

You can read more about Liberty HealthShare at We No Longer Have Traditional Health Insurance – Liberty HealthShare Review.

 

The Honest Truth About Van Dwelling: Answers To The Most Common Van Life Questions

How do you get internet while traveling full-time?

I hear this question all the time, and it’s one of the top things that stops people from traveling more.

And, I completely understand the hesitation!

When we first thought about traveling full-time, I had no idea what would happen to my business. I didn’t know how I would connect to the internet, if it would be super expensive, or anything else. I didn’t even really know if it was possible.

I still remember telling Wes (my husband) that I would not be able to travel full-time unless we had internet.

But, now I know it’s actually not too bad. There is usually some form of internet, and I almost always use my own source. It’s not terribly expensive either. Yes, sometimes there is absolutely no internet. However, I usually try to prepare for that by working ahead as much as I can.

We currently have AT&T for our phones and internet. We used to have both Verizon and AT&T (many full-time travelers have multiple sources because you travel to different areas), but we switched to just AT&T and have been happy with it.

Even with that being said, sometimes our internet connection is not that great. Working ahead as much as possible alleviates any work stress that would come from having a lack of internet or a bad connection.

I did just get a WeBoost and put it on the van so that I can improve my signal and work in more places. Since Sprinter van life means we are off the grid a little more often, this is a must for us so that I can still work! 

So far, it has been amazing, and I have been able to have internet almost everywhere that we’ve been due to the WeBoost. About half of the places that we have stayed so far in the van have had no internet, and the WeBoost has boosted our signal to a point that I can actually work! I don’t know how I’ve gone the previous four years of full-time travel without it!

Surprisingly, I’ve found that our internet connection is better in the Bahamas than anything we ever had in the U.S. while traveling full-time. We used a new company called MyIslandWifi. It is truly unlimited internet for just $75 a month (and there’s no contract!). I can make phone calls, text, and hop online whenever I want, and it’s always a fast speed. For people in normal homes, this may seem expensive, but keep in mind that when traveling full-time you don’t have access to the kind of affordable (and FAST) wifi that is usually found in a home.

When we start traveling further outside of the U.S. and Bahamas, I know that finding internet will become more difficult. I’ll update you as I go!

If you’re wanting to know more about the various options (and there are a lot of options!), I highly recommend RV Mobile Internet.

Everyone’s situation is a little different and different options exist due to that.

What other questions do you have for me about van dwelling? Are you interested in living in a van?

The post The Honest Truth About Van Dwelling: Answers To The Most Common Van Life Questions appeared first on Making Sense Of Cents.



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Finance

In the Market for a Home? Why a Conventional Loan Could Be Right for You

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Conventional sounds so… conventional.

But the traditional path to home ownership doesn’t have to be boring — especially if it could save you thousands of dollars over the life of your home loan.

Government-backed loans — like the Federal Housing Administration (FHA) or Veteran’s Administration (VA) — might get more attention for the low (or no) down payments, but the reality is that the more people get conventional loans when buying a home. 

Of the $1.63 trillion in first mortgages taken out in 2018, conventional loans claimed 45% of the market while FHA’s and VA’s combined share was 22.6%.

And although a government assistance program may seem like an easy way to home ownership, there’s a good chance that may not even be an option.

“At least a third of the people I work with are not eligible for assistance programs,” said Lisa Hamilton, an Accredited Financial Counselor and a counselor at the U.S. Department of Housing and Urban Development (HUD).

Since a home will probably be your biggest purchase, it’s in your best interest to understand how the loan works. Here’s what you need to know about a conventional home loan.

What Is a Conventional Loan?

At its most basic, a conventional loan is a mortgage that is not guaranteed or insured by any government agency.

The loans follow guidelines set by the Federal National Mortgage Association, aka Fannie Mae, and the Federal Home Loan Mortgage Corporation, aka Freddie Mac, two companies chartered by the U.S. government to help standardize mortgage lending.

A monthly mortgage payment has four basic components: principal, interest, taxes and insurance — also known as PITI.

Compare that to FHA loans, which are insured by the Federal Housing Administration, or VA loans, which are covered by the U.S. government. 

If a loan is backed by a government agency, the government will cover your loan if you stop paying it. But that comes at a price, compared to the cost of a conventional loan. Here’s how to decide whether a conventional loan is a better fit for you.

How Do You Qualify for a Conventional Loan?

As with any loan, there are metrics you must meet to qualify for a conventional loan. When you apply for a mortgage, your lender will consider your current income (verified via paycheck stubs, W2s and tax returns) and employment status, in addition to these other criteria.

1. Down Payment

If you’ve heard anything about conventional loans, it’s probably that you need to have a 20% down payment to get one. 

And although putting 20% down will still get you the best terms with the lowest interest and fewest fees, coming up with 20% for a $200,000 home would mean a home buyer would need to have $40,000 — plus additional money for closing costs, inspections and moving. That’s not an easy bar to clear for most first-time buyers.

To attract more customers, lenders have relaxed the 20% rule.

“The lending market has become more competitive, and banks have what they call ‘conventional mortgages’ with 5% down,” Hamilton said. “Or they may run a special and call it a conventional mortgage with 1% down.”

Pro Tip

Although you may be tempted to throw every last dollar toward the down payment, hold onto enough money for an emergency fund — home ownership often comes with unexpected expenses.

If you do decide to put less than 20% down, lenders will require you to add private mortgage insurance (PMI), which is added as a monthly premium to your mortgage payment. 

After you have reached 20% equity in your home, you can call you lender and ask to cancel the PMI (cancellation should happen automatically once you achieve 22% equity).

2. Credit Score

The minimum credit score for a conventional loan is 620 to 640, depending on your lender. However, if you want to take advantage of the lower down payment option, you should plan on raising your credit score as much as you can before you apply.

If you can put down 20% and raise your credit score before you apply for a loan, you’ll be able to snag even better interest rates and terms.

3. Debt-to-Income Ratio

Your debt-to-income ratio gives the lender an idea of how much of your income is going toward paying off your debt each month. 

A “good” DTI for housing is around 25% while the maximum is typically 43%, according to Brent Weiss, CFP and chief evangelist of Facet Wealth

However, lenders have been willing to go even higher, given the right circumstances, according to Hamilton.

“[Lenders] will make exceptions if you have a lot of cash reserves,” she said. “Some lenders are going as high as 55% DTI with those exceptions.”

FROM THE DEBT FORUM

How Much Can You Borrow? Conforming vs. Nonconforming Loans

Once you know whether you can qualify for a conventional loan, you’ll need to know how much you can borrow. 

For most people, that means applying for a conforming loan. This is a type of conventional loan that meets Freddie and Fannie requirements, so lenders prefer them and thus usually offer better interest rates.

In most of the United States, the maximum conforming loan limit for 2019 is $484,350 — you can find the maximum amount for your area on this conforming loan limits map.

Pro Tip

The majority of conventional loans are for 30 years, but it’s possible to qualify for a 15- or 20-year mortgage loan, which could save you money on interest in the long run.

If you want to borrow more than the limit, you can still get a conventional loan but it will be a non-conforming jumbo loan, which can go as high as $1 million to $2 million. You’ll typically need a combination of really high credit score, large down payment and/or low DTI to qualify.

If you’re considering a non-conforming loan, it’s essential to shop around for the best rates and terms — and always ask for a loan estimate before signing anything.

What Are the Benefits of a Conventional Home Loan?

If you can qualify for a conventional loan, you can save thousands over the life of your mortgage in a couple ways.

For one, although the smaller downpayment on an FHA or VA loan might look attractive initially, both of those loans come with higher fees because the government is assuming the risk if you default on the loan.

Additionally, you can cancel the PMI for a conventional loan when you reach 20% equity in your home. If you have an FHA, you’ll pay the insurance (aka Mortgage Insurance Premium) for the life of the loan, which can really add up over 30 years.

“If your mortgage insurance is $50, $75, $100 per month, that’s quite a bit of money,” Hamilton said. “Buyers need to be aware of that added cost and how it can affect their ability to pay off the loan for that home to become a good investment vehicle.” 

If you still decide to go with a government-backed loan — whether by choice or necessity — consider re-evaluating the conventional loan option in the future.

“If you go FHA, then plan to do that assessment every year, every couple of years,” Hamilton said. “Check in and decide, ‘Should I refinance? What’s the best long-term strategy?’”

Consider it conventional wisdom.

Tiffany Wendeln Connors is a staff writer/editor at The Penny Hoarder. Read her bio and other work here, then catch her on Twitter @TiffanyWendeln.

This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.



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529 College Savings Plans: All 50 States Tax Benefit Comparison (Updated 2019)

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Updated for 2019. When choosing a 529 college savings plan, you can open a 529 plan from any state. However, each state can vary widely in what they offer in terms of tax deductions and/or matching grants. 16 states offer no tax break on contributions and 7 states give you the same tax benefit no matter which 529 plan you pick. The remaining 27 states do offer some sort of tax benefit, so you’ll have to weigh your in-state benefits against the superior investment options from an out-of-state plan.

Morningstar has just published their 529 College-Savings Plan Landscape report for 2019, which included a state-by-state summary of the tax benefits:

They also have a new article When It Comes to 529s, How Good Is Your State’s Tax Benefit? that helps to quantify how good the tax benefit is, in terms of how many years of investment expenses it offsets for a theoretical household. More years (darker blue) is better:

These days, for the most part, if your state offers a tax benefit, it’s worth sticking with your in-state 529 plan as long as you are choosing the low-cost index fund “autopilot” options. The formerly “bad” plans have gotten closer the rest of the pack. You might still prefer another state plan for a specific investment option, I suppose.

They also updated this chart that quantifies tax benefits for a hypothetical family with a $60,000 income.

If you really like another state plan, you can look into their “recapture” rules as to what happens if you roll over your assets to another state plan later down the road after your initial contribution. Sometimes you can wait out the recapture period and then roll funds over to a better state 529 plan for free (once every rolling 12 months).

Again, if your state has no special tax break or it does “tax parity” – meaning it offers the same tax benefits for any 529 plan – then I would simply choose from this list of best nationwide 529 plans.



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529 College Savings Plans: All 50 States Tax Benefit Comparison (Updated 2019) from My Money Blog.


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Direct v/s Regular Mutual Funds: Know the Difference

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Mutual Funds are available in two plans – Regular and Direct. While regular mutual fund plans are commonly-known to investors, direct mutual fund plans have started becoming popular recently.

What Is a Direct Mutual Fund Plan?

The Securities and Exchange Board of India (SEBI) introduced direct mutual fund plans in January 2013, making it mandatory for all Asset Management Companies (AMCs) to provide an option to invest in mutual fund schemes directly, without the involvement of an agent, broker or distributor, which is the case with regular mutual fund plans.

What Is the Difference Between Direct And Regular Plans?

Particulars Regular Plan Direct Plan
Expense Ratio High Low
Returns Low High
Investment Advice Available Not Available
Market Research Done by distributor/agent Done by self
Convenience More Less

Regular and Direct plans are just the two options to buy the same mutual fund scheme, run by the same fund managers who invest in the same stocks and bonds. The only difference between the two is that in the case of a regular plan your AMC (Asset Management Company) or mutual fund house does pay a commission to your broker as distribution expenses or transaction fee out of your investment, whereas in case of a direct plan, no such commission is paid.

Instead, in the case of direct plans the commission is added to your investment balance, thereby reducing the expense ratio of your mutual fund scheme and increasing your return over the long term.

To understand it better, let’s take an example. For instance, Mr. X and Mr. Y invested in three mutual fund schemes, namely HDFC Equity Fund, Aditya Birla Sun Life Liquid Fund and HDFC Balanced Advantage Fund via a monthly SIP of Rs. 5,000 for each scheme on 01 April 2014. While Mr. X chose the regular plans of these schemes, Mr. Y chose to invest in the direct plans.

Value of Mr. X’s and Mr. Y’s investments after 5 years.

Particulars/Schemes HDFC Equity Fund Aditya Birla Sun Life Liquid Fund HDFC Balanced Advantage Fund
Mr. X (Regular plan) Rs. 4,00,335 Rs. 3,63,967 Rs. 4,05,544
Mr. Y (Direct plan) Rs. 4,10,115 Rs. 3,64,837 Rs. 4,14,396
Difference Rs. 9,780 Rs. 870 Rs. 8,852

Here’s a comparative analysis of the average expense ratio and average returns of the direct and regular plans of mutual funds across different fund categories.

Average Expense Ratio of Regular and Direct Mutual Fund plans

Fund Category Regular Plan Direct Plan Difference
Equity 2.02% 1.22% 0.80%
Debt 0.90% 0.42% 0.48%
Hybrid 1.96% 0.98% 0.98%

Source: Value Research, Data as on March 31, 2019.

As the table above shows, on an average, you will earn 0.50%-1% more per annum by investing in a mutual fund scheme through its direct plan rather than its regular variant.

Why Is the Direct Plan of a Mutual Fund Better Than Its Regular Plan?

  • Lower expense ratio.
  • Higher return due to reinvestment and compounding of amount which gets paid as commission in regular mutual fund plans.

How To Know If You Are Invested In Regular Plans Or Direct Ones?

The account statement/fund holding statement will clearly state whether your mutual fund plan is regular or direct. Typically, if you have invested in a mutual fund scheme through your bank, then it would be a regular plan. If you have invested via the website of the mutual fund, the plan would be direct.

Also, if you are receiving a ‘free of cost’ service from your investment agent or if he/she tells you he/she is paid by the mutual fund company then in all likelihood you have invested in a regular mutual fund plan and are paying a hidden fee.

Also Read: How To Switch From Regular To Direct Mutual Funds?

The post Direct v/s Regular Mutual Funds: Know the Difference appeared first on Compare & Apply Loans & Credit Cards in India- Paisabazaar.com.



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