Buying an investment property before your first home can be an interesting and financially sound plan. There are clear advantages — generating cash flow or building equity in your asset could benefit you and your family for years to come. You may be able to qualify as a first-time home buyer and take advantage of programs that allow you to buy a multi-family property. You may also be able to produce a strong enough income for the unit to pay for itself.
Yet, there can be significant sacrifices you may need to contemplate in order to make this dream happen. Here, learn what needs to happen if you’re planning on buying an investment property before your first home, including:
• Is buying an investment property before your first home a good idea?
• What are the steps for buying a house to rent?
• What are the benefits of buying a house as an investment while still renting?
Purchasing an Investment Property 101
Purchasing an investment or rental property is similar to a regular home purchase. When you’re looking at buying an investment property for which you qualify as a first-time home buyer, however, there are some special considerations. Here is a guide:
Step 1: Decide if you’re going to live in a part of the investment property. One of the first things you should decide when purchasing a rental property is if you’re going to live in a part of the investment property. This decision will affect what types of properties you’re going to look at, how you’re able to finance the property, and how much down payment you’ll need to come up with.
For example, if you can buy a house to rent with two to four units and live in one yourself, you may be able to finance the purchase as an owner-occupied property. This may qualify you for lower interest rates, lower down payment options, and more favorable loan options. However, you do have to live on the property. You cannot finance a property with an owner-occupied loan without living on the property as this is considered a type of mortgage fraud.
Here’s a quick summary of the difference between owner-occupied and non-owner-occupied rental properties.
Owner-Occupied
Non-Owner-Occupied
Down payment options from 3.5%
Down payment typically around 15%
Lower interest rates by about half a basis point
Interest rates higher by about half a basis point
Step 2: Get preapproved for a loan. Before you go shopping, make sure a lender is willing to give you a mortgage. Qualifying as a first-time homebuyer has some positives. On the one hand, you may have a better debt-to-income ratio since you don’t own a home yet. However, you may have a shorter credit history or a smaller down payment. Whatever the case, it’s helpful to get some numbers from your lender to assist with your investment.
Factors your lender will take into account when deciding what to lend to you include:
• Amount of your down payment
• Owner occupied status
• Credit score
• Debt-to-income ratio
• Employment history.
Your lender will also take into account what programs you qualify for. Financing options for an investment property are wide. Some may include:
• FHA
• VA
• USDA
• Conventional
• Private lending
• Seller financing
Quick note: If you do decide to purchase a rental property and live in part of your investment property, your lender may be able to use the potential rent from that to qualify you for a mortgage.
Step 3: Find a property that meets your criteria Now that you have your budget and parameters set, you’re ready to find a property. You may want to enlist the help of a real estate agent who can serve as your first-time homebuyer guide, especially since you want to buy an investment property right off the bat.
Your agent can help you write an offer while your lender may be able to help you apply for a mortgage online. You’re well on your way to buying a house to rent at this stage.
Step 4: Start your rental business. Be sure to check local ordinances and business requirements for becoming a landlord. If you’ve got a plan and do your research, you may see success. Just don’t believe what you may see on TV, which makes owning a rental property look easy. Landlording is a tough job, and there’s a lot you need to know about the business before you start. Buying a house while renting is an endeavor that takes time and effort.
Buying a House While Still Renting
The benefit to buying an investment property before your first home is that your debt-to-income may be more favorable than for someone who has a mortgage. What this means is it’s possible you don’t have too much debt to qualify for a rental property.
The possible downsides are that you may not have the cash reserves to protect yourself from the risks of being a landlord. There’s always something that needs to be repaired or replaced.
What to Know As a New Landlord
Unlike what you may have heard or imagined, becoming a landlord can be anything but passive. You’ll also want to research all you can and put proper systems in place. Here’s a little of what you can expect to encounter as a new landlord.
• Learn local housing laws. Housing laws can make or break you. Are short-term rentals allowed (if that’s what you’re planning)? What rights does your tenant have? If you need to evict a tenant, what does the process look like? Will you benefit by putting your property in an LLC?
There’s a lot to navigate, and you may want to consider hiring a property management company that specializes in this.
• Determine how much to charge for rent. You’ll want to look at what other properties in the area are charging for rent and position yourself competitively. Also, consider what other landlords are allowing and charging when it comes to pets.
• Prescreening is key. The reliability of your tenant is so important. It’s incredibly stressful when you’re not paid rent. Don’t rent to someone who “feels” like they would be a good tenant. Do your due diligence. Check credit and their background, and call references.
• Create a plan for home maintenance, repairs, and other issues. If you’re hiring a property management company, plan for the expense. If you’re doing it yourself, make a list of contacts to call for the different issues that come up (electrical, plumbing, locks, handyman, etc.).
• Have procedures in place for unit turnover. It’s an incredibly intense time when a tenant leaves and another needs to move in. How are you going to handle inspections? Cleaning? Deposits? You will need a system for logging such events and being prepared for turnover.
Recommended: Fixed-Rate vs. Adjustable-Rate Mortgages
The Takeaway
While landlording has a lot of responsibilities and risk, there can also be a lot of reward. If you’re really interested in buying a house while renting, you’ll find a way to make it work.
If you’re starting to shop for a new home and need a partner to help with your lending needs, see what SoFi has to offer. With a wide range of loans to choose from, low down payment options, and competitive interest rates, SoFi Mortgage Loans can be a great fit.
A SoFi Mortgage: Smart, simple, and flexible.
FAQ
How much profit should you make on a rental property?
There’s no easy answer for how much profit you should make on a rental property. Some investors buy property for the appreciation alone. There are also a number of methods for determining how much profit investors want to make on an investment property, such as cash flow, the 1% rule, gross rent multiplier, cash on cash return, cap rate, or internal rate of return. Those can help provide guidelines.
Should I buy an investment property and live in it?
If you’re able to live in your investment property, you can qualify for owner-occupied financing, which means lower down payments and better interest rates. But it also depends on your plans. If you want to renovate an investment property, living in it during renovations could be challenging.
Is rental property a good investment in 2023?
Rental demand is strong in 2023, but buying property is more dependent on your individual situation rather than market conditions.
Photo credit: iStock/luismmolina
SoFi Mortgages Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility for more information. SoFi Loan Products SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender. Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances. This article is not intended to be legal advice. Please consult an attorney for advice. SOHL0223006
VA loans present an incredible opportunity to eligible active duty service members, veterans, reservists and qualifying surviving spouses. But if you live in an expensive area or need a bigger loan, a regular VA loan might not be enough. Luckily, a VA jumbo loan is an option.
Here’s what you need to know about this mortgage type.
See if you’re eligible for a VA home loan (Apr 27th, 2023)
What is a VA jumbo loan?
A VA loan is considered a jumbo loan if it exceeds the conforming loan limits for your county. Technically, there is no maximum VA loan amount. But the loan cannot exceed the appraised value of the home.
What is VA Entitlement?
Essentially, VA entitlement is the amount that the Department of Veterans Affairs will guarantee for a lender. So, if you default on the loan, your VA entitlement is the maximum amount that the VA would repay your lender.
You will have a full entitlement if this is your first time using a VA loan. Another way to get full entitlement is to pay off a previous VA loan in full and sell the property. If you have a full entitlement, the VA will guarantee up to 25% of the loan amount. Importantly, you can only have your full entitlement restored once.
But if you previously purchased a house with the VA loan and haven’t paid off the loan, you may only have a partial entitlement left. With a partial entitlement, otherwise known as an impacted entitlement, you may still qualify for a jumbo loan. But you’ll have to make a down payment if you exceed your entitlement.
See if you’re eligible for a VA home loan (Apr 27th, 2023)
VA loan limits & VA jumbo loan limits
As a homebuyer, knowing the limits of a loan type are important.
When it comes to government-backed VA loans, most homebuyers don’t have a limit. As of 2020, the Department of Veterans Affairs announced changes to the loan program. These changes included that it would guarantee the same percentage of the loan amount for lenders without regard to the loan amount.
Of course, this generous guarantee is only available if your full entitlement is intact.
If you have a partial entitlement, the numbers change a bit. You’ll run into a loan maximum that is impacted based on your down payment. Essentially, you’ll multiply your remaining entitlement by 4 to arrive at your maximum loan amount. But if you are making a down payment, you can add that to your remaining entitlement and multiple it by 4 to arrive at your maximum guarantee available through the VA.
What qualifies as a VA jumbo loan?
A VA mortgage loan is considered a jumbo loan when the amount exceeds the conforming loan limits. Although these limits vary by county, the range is from $647,200 to $970,800 for single-family homes. You can find the conforming loan limits through this convenient map provided by the Federal Housing Finance Agency.
But just because the VA is offering to guarantee this amount, it doesn’t mean that you’ll find a lender willing to approve you for a jumbo loan. With this in mind, you won’t run into a loan ceiling set by the VA. But you will run into a loan limit based on your qualifications.
VA jumbo loan requirements
A VA jumbo loan might be an option for you. The requirements to qualify for this large loan will vary based on the lender.
Is a down payment required for a VA jumbo loan?
For those with full entitlement, the loan can exceed the conforming loan limit for your county. With that, you would have access to a VA jumbo loan. You may not even need to make a down payment.
If you have a partial entitlement, you could still qualify for a jumbo loan. But you may need to make a bigger down payment because you’ll likely exceed your entitlement.
Ultimately, the lender will determine whether or not you need to make a down payment on a VA jumbo loan. For example, a lender may offer a loan of $1.5 million without a down payment to a borrower with a high credit score. But the same lender may require a down payment of 10% on a $2 million loan.
When considering a VA jumbo loan, it is critical to shop around. The right lender will be able to provide the ideal loan for your situation.
Requirements to qualify
The requirements for a jumbo VA loan vary based on the lender.
In general, you can expect more stringent requirements than you would find with a regular VA loan.
Most lenders will want borrowers to have a credit score of at least 620. Plus, you may need to have some cash reserves on hand to qualify for this loan.
VA jumbo loan rates
Typically, VA jumbo loan rates are similar to regular VA mortgage rates. The exact fixed rate you see will vary based on the lender and your loan qualifications.
The good news is your VA jumbo loan rates should be lower than they would be for a traditional jumbo loan. Low rates are just one of the many VA loan benefits available for those with the appropriate military service.
VA jumbo loan funding fees
As with all VA loans, you’ll have to pay a funding fee for the jumbo option.
The VA loan funding fee ranges from 0.50% to 3.6% of the purchase price in 2022. The exact fee will vary based on your loan purpose, which can include purchase, refinance (IRRRL), or cash-out refinance. Additionally, any previous usage of the VA loan can impact your fee.
Although there is a funding fee, you won’t have to pay PMI. With that, your monthly mortgage payment won’t have that added cost.
Pros & cons of a VA jumbo loan
Every mortgage product has advantages and disadvantages. Here’s what to keep in mind about the VA jumbo loan.
Pros of a VA jumbo loan
Lower interest rates: You’ll likely find lower interest rates with a VA jumbo loan than with a traditional jumbo loan.
Possibility of no down payment: Depending on your situation, you might not have to make a down payment.
Cons of a VA jumbo loan
Funding fee: You’ll have to pay a funding fee of 0.5% to 3.6%.
More extensive property requirements: The property will need to pass a VA home inspection.
VA jumbo loans vs. traditional jumbo loans
Like VA jumbo loans, traditional jumbo loans offer amounts over the conforming loan limit. And with that, traditional jumbo loans cannot be sold through the secondary mortgage market based on the guidelines set by Fannie Mae and Freddie Mac.
The limitations on resale of traditional jumbo mortgages make it challenging for borrowers to find these types of home loans. If you are seeking a traditional jumbo loan, you’ll likely need to make a 20% down payment. That’s on top of having great credit and significant cash reserves.
But VA jumbo loans can be securitized through Ginnie Mae, which makes lenders more willing to provide the loan. Plus, the guarantee by the VA makes a VA jumbo loan easier to obtain than a traditional jumbo loan.
VA jumbo loan FAQ
What is a VA jumbo loan?
A VA jumbo loan offers loan amounts over the conforming loan limits for your county.
This loan type is available through VA lenders that work with eligible borrowers. You’ll need to be an active-duty service member, veteran, or surviving spouse seeking a primary residence. If you are eligible for a standard VA loan, you may be eligible for a VA jumbo loan.
Does the VA allow jumbo loans?
Yes, the VA allows jumbo loans as part of its home loan benefit program.
If you have a full entitlement, you won’t encounter a loan limit from the VA.
How does a VA jumbo loan work?
A VA jumbo loan works by allowing eligible borrowers to obtain loans larger than the conforming loan limits. If you are eligible for a VA loan, a lender may be willing to provide a VA jumbo loan.
What is considered a VA jumbo loan?
A VA jumbo loan is considered any VA loan with an amount larger than the conforming loan limits for a particular county.
When making a home purchase in a high-cost area, the conforming loan limit can be higher. But it might not be enough if home prices are too high. That’s when a VA jumbo loan can come in handy because the loan amount can exceed the limits.
How much do you have to put down on a VA jumbo loan?
The required down payment for a VA jumbo loan varies. In some cases, you won’t have to make a down payment. But some lenders will require a down payment.
In either case, you’ll need to cover a VA funding fee of 0.50% to 3.6%. That’s a substantial fee that will add to your closing costs.
Can I get a VA loan for $1,000,000?
It’s possible to get a VA loan for $1,000,000 but you’ll need to meet the unique borrower requirements of a lender. You’ll likely need a great credit score and substantial cash reserves to qualify for a VA loan of this size.
See if you’re eligible for a VA home loan (Apr 27th, 2023)
A VA loan is a mortgage loan that’s backed by the U.S. Department of Veterans Affairs. These loans are reserved for military service members, veterans, and their spouses. The VA home loan program is one of the lowest-cost, most valuable mortgage loan options currently available.
See if you’re eligible for a VA home loan. Start here. (Apr 26th, 2023)
Benefits of a VA loan
VA loans come with a number of significant benefits to home buyers, particularly when compared with other types of mortgage programs.
Just a few VA loan advantages include:
No down payment required: Most other loan programs require at least 3% down ($9,000 on a $300,000 house).
Competitively low interest rates: Rates on VA loans are some of the lowest you’ll find. This saves you both monthly and in the long run.
Closing costs are limited: You can’t be charged an origination fee of more than 1%, and sellers can contribute a large portion of your closing costs.
No prepayment penalty: This means you can pay off the loan or refinance quickly without an added fee.
No private mortgage insurance (PMI) is required: The majority of other loan products require mortgage insurance, which adds upfront and monthly fees.
VA loans are also assumable, which means if you eventually sell the house, the buyer can take over your loan, too — a huge perk, given the low rates and other benefits VA loans come with.
VA mortgage rates 2023
When compared to other loan types — conventional loans and FHA loans, for example — VA home loans offer consistently lower rates than loans for the average consumer.
VA
Conventional
FHA
December 2021
2.99%
3.38%
3.39%
November 2021
2.95%
3.32%
3.32%
October 2021
2.88%
3.22%
3.22%
September 2021
2.85%
3.17%
3.20%
August 2021
2.88%
3.19%
3.23%
July 2021
2.94%
3.27%
3.27%
Source: Ellie Mae Origination Insight Report, June 2021
*These rates are only averages. Your VA loan rate could be higher or lower than average depending on factors like your credit score and down payment size. Check with a lender to find out what rate you qualify for.
Click here to request a VA home loan quote. (Apr 26th, 2023)
Types of VA loans
There are several types of VA loans to choose from. The right one depends on your goals as a borrower, as well as how you’ll be using the funds.
The four main types of VA loans include:
VA purchase loan: These are VA loans designed for purchasing a property. You can buy a single-family home, a multifamily home with up to four units, a manufactured or mobile home, an approved condo unit, or a new construction home.
VA Streamline Refinance: The VA’s Streamline Refinance — also known as a VA Interest Rate Reduction Refinance Loan (IRRRL) — is for existing homeowners looking to refinance their mortgage and reduce their interest rate.
VA cash-out refinance: With a VA cash-out refinance, you take cash out of your home. It replaces your existing mortgage with a newer, larger one, giving you the difference in cash.
VA energy efficient mortgage: Also called EEMs, these are VA loans that can help you finance energy improvements on your home.
The VA also offers NADL loans, which are mortgages reserved strictly for Native American veterans buying on federal land.
VA loan eligibility requirements
VA loans are only for qualified veterans, active-duty service members, and, in many cases, their surviving spouses. To qualify, you’ll need to meet specific service requirements.
These service requirements vary slightly based on when you served, but generally speaking, you will need to have at least one of the following:
90 consecutive days of active service during wartime
181 days of active service during peacetime
6 years of service in the National Guard or Reserves
A veteran/service member spouse who died in the line of duty or due to a service-related disability or injury
To prove you have the above service record, you’ll need to submit a Certificate of Eligibility (COE) to your lender. This is a document that details your service record, the nature of your release from the military, and your VA loan entitlement.
You can get your COE through the VA eBenefits portal online. Or, when you apply for a VA loan, the lender can request a COE on your behalf. This usually takes only a few minutes.
Qualifying for a VA loan
Beyond service eligibility requirements, the VA doesn’t set specific financial standards for these mortgages. The individual private lenders that issue VA loans, however, often do. While these vary from one lender to the next, you can typically expect to need a 620 credit score and a 41% debt-to-income ratio or lower.
The good news is, there’s no down payment required for a VA loan. So eligible borrowers can qualify for a VA home loan with very little cash upfront.
VA property requirements
The VA home loan program is designed to help military service members and their families purchase a primary residence, which means you cannot use your VA home loan benefits to purchase a second home, vacation home, or investment property.
Additionally, the home must meet certain standards set by the VA to ensure the home is safe and livable.
How does a VA loan work?
The VA loan process is fairly similar to that of other mortgage programs, just with a few added steps along the way.
Are you considering a VA loan for your home purchase or refinance? Just follow these steps:
#1. Verify eligibility and request your Certificate of Eligibility (COE)
The first step is to make sure you meet the VA’s service requirements (you can see the full list here). If you do, you’ll need to request your Certificate of Eligibility, which proves you’re eligible for the program. You can get your COE in your eBenefits portal, request it by mail, or ask your lender to pull it on your behalf.
#2. Get prequalified
The next step is to get prequalified for your loan. To do this, you’ll give a lender some basic information about your finances. They’ll then determine if you’re a good candidate for a VA loan and how much home you can likely afford.
#3. Get pre-approved
Next, you’ll apply for a full pre-approval. This requires filling out an application and submitting to a credit check, both of which your lender will consider in detail. Once they’ve analyzed it all, you’ll get a pre-approval letter stating how much you can borrow and at what interest rate. You can use this to guide your home search.
#4. Put in an offer
After you’re pre-approved, you can start shopping for a house. When you’ve found that perfect property, submit an offer, and include your pre-approval letter. If the seller accepts, it’s time to move through the rest of the VA loan process.
#5. Go through the VA appraisal and underwriting
You’ll need to fill out your lender’s full loan application next, and your lender will order an appraisal of the property you intend to buy. They’ll also begin underwriting your loan, which essentially means verifying all your information to ensure you can meet the obligations and pay your mortgage.
#6. Close on your new home
When your loan is fully underwritten, you’ll be scheduled for a closing appointment, which is when you’ll pay your closing costs, sign your paperwork, and get your keys.
What is the VA funding fee?
The VA funding fee is a one-time fee you’ll pay at closing. It varies from 0.5% to 3.6% of your loan amount and is used to help sustain the VA mortgage program.
The amount of the VA funding fee you’ll pay depends on the nature of your military service, the size of your down payment, the type of loan you want and the number of times you’ve previously used your VA home loan benefit.
First-time use purchase VA funding fee
Down Payment
Veteran/Active Duty
Reservist/National Guard
Less than 5%
2.3%
2.3%
5% to 9.99%
1.65%
1.65%
10% or more
1.4%
1.4%
How does VA loan assumption work?
With a VA loan assumption, the VA loan transfers with the house. The buyer assumes the seller’s VA loan, including its same rate, terms, and balance, and resumes making payments as initially planned through the original loan. Though the buyer doesn’t need to be a veteran or military member to assume a VA loan, they do need to meet all the financial requirements of the loan program (and the lender) to be eligible.
Ready to get started? Request a VA home loan quote here. (Apr 26th, 2023)
VA Home Loan FAQ
What is a VA loan?
A VA loan is a mortgage backed by the Department of Veterans Affairs. Only active duty military members, veterans, and their spouses are eligible.
What are the benefits of a VA home loan?
There are many benefits to a VA loan. They require no down payment, have low interest rates, and do not require mortgage insurance. They also come with limited closing costs and are assumable.
How does a VA loan work?
VA loans are guaranteed by the Department of Veterans Affairs, meaning it will pay back the lender if a borrower defaults on the loan. This reduces the risk that lenders take on and allows them to offer loans with no down payments, no mortgage insurance, and lower credit score minimums.
What’s the difference between a VA loan and a regular loan?
VA loans are only for military members and veterans, so that’s the biggest difference. They also require no down payment, which is rare when it comes to mortgage loans. Most other loan programs require 3% to 3.5% down payments minimum.
What is the interest rate on a VA home loan?
Your interest rate will vary depending on your credit score, debt-to-income ratio, loan amount, down payment, and other details. Generally speaking, VA loan rates are lower or comparable to rates on other loan programs.
What credit score is needed for a VA home loan?
The VA doesn’t have a set credit score minimum for its loans, though individual lenders often do. This is typically between 620 and 640, depending on your mortgage company.
What is the minimum income for a VA loan?
There is no minimum income to be eligible for a VA loan. Your lender will, however, consider your debt-to-income ratio to be sure you can comfortably make your monthly payments.
What are VA loan limits?
There are no limits on VA loans. You can borrow as much as you can financially qualify for, given your credit history, debt-to-income ratio, and other financial details.
What is the VA funding fee?
The VA funding fee is a one-time fee all VA borrowers pay at closing. It goes toward supporting and sustaining the VA loan program. Funding fees vary between 0.5% and 3.6% of the loan amount depending on your down payment size, type of loan, and the number of times you’ve used your VA loan benefit.
What is needed for a VA home loan?
For a VA loan, you (or your spouse) will need to meet the military service requirements set out by the Department of Veterans Affairs. You will also need to submit a Certificate of Eligibility, as well as various forms of financial documentation, including tax returns, W-2s, and more.
What is needed to get a VA home loan?
To get a VA loan, you’ll need to work with a VA-approved mortgage lender, submit your COE, and meet the remaining eligibility and documentation requirements of your lender.
How does a VA assumable loan work?
VA loans are assumable, meaning when a VA-financed home is sold, the buyer may be able to assume the VA loan attached to it, too. The buyer does not need to be a military member for this to happen, though they will need to meet other financial requirements set out by the VA and the lender.
What are the pros and cons of a VA loan?
The pros of a VA loan are many. There’s no down payment or mortgage insurance, and rates are competitively low. On the downside, they come with strict appraisals and can sometimes take a bit longer to process than loans through other programs.
Is a VA loan really worth it?
If you can qualify, VA loans are most often worth it. With zero down payment and no mortgage insurance requirement, they can make buying a house much more affordable than an FHA or conventional mortgage. They also have no hard-and-fast credit score minimum.
Do you pay back a VA loan?
You repay a VA loan just as you would any other type of mortgage or loan product. VA loans come with either a 15- or 30-year loan term, which means your monthly mortgage payments are spread out over either 15 years or 30.
If I’ve previously used a VA loan, can I use it again?
Your VA loan benefit never expires. After you pay off your existing VA loan, you can continue to use the VA loan again and again. In some cases, you may be able to have two VA loans simultaneously.
Are VA loans a good deal?
When compared to other mortgage loans, VA loans are absolutely a good deal. Thanks to the VA guarantee, your mortgage lender can afford to pass significant benefits along to borrowers. VA home loans have fewer upfront costs, low interest rates, and no mortgage insurance, making them one of the best mortgage loan products on the market.
See if you’re eligible for a VA home loan. Start here. (Apr 26th, 2023)
One of the biggest hurdles VA home buyers must clear is the VA appraisal. VA appraisals are much like regular appraisals — an approved appraiser will come out to the house you’re looking to buy and establish its value.
The main difference is the VA has stricter guidelines when it comes to houses. The Department of Veterans Affairs is a government agency that guarantees VA home loans, so they want to make sure the house meets its standards.
Check today’s VA rates (Apr 26th, 2023)
VA appraisal process
The VA appraisal process is very similar to any other home appraisal. Your VA lender will order an evaluation with a VA-approved appraiser as a part of the loan process.
The VA appraiser’s job is to establish a “fair market value” for the property and ensure the home meets the VA’s Minimum Property Requirements. If the requirements aren’t met, then a property may not qualify for a VA loan.
What if the VA appraisal comes in too low?
Unfortunately, VA appraisals can work against the home sale. If a VA appraisal comes in low compared to the loan amount, problems can occur.
For example, a home on the market for $275,000 can get a VA offer with all $275,000 financed. But if the VA appraisal report says the home is only worth $265,000, then suddenly the VA will only finance up to $265,000. This means the VA home buyer needs to make up the $10,000 difference between the purchase price and the appraisal value.
But even if your VA appraisal comes in low, you have options.
Getting a reconsideration of value
If a VA appraisal comes in low, a reconsideration of value (ROV) could be the best option.
An ROV is when the VA reevaluates how much the home is actually worth. Depending on how it goes, it could completely change the VA appraisal.
One way to get an ROV is to find better comps. “Comps” is short for “comparable homes” or “comparable sales”: similar homes to the one you’re trying to buy. If you can find comps closer to your expected price range, the VA may reevaluate their decision. For example, a similar home with no view may be valued the same as the home you’re buying. But that view has a market value, and you can make the argument the home should be valued higher.
There’s also always the chance the appraiser made an error in valuation, or they missed something when appraising the house. If this is the case, then a new appraisal could shift the value of the property in the borrower’s favor.
While they help some VA buyers, ROVs don’t always work out. If the appraised value is still too low, there are other ways to avoid paying huge costs to make up the difference.
Ask the seller to lower the sales price
One of the most common ways VA home buyers get around a low appraisal is by getting the seller to lower the sales price. Some homes are overvalued, and a low VA appraisal should be a wake-up call to the current homeowner that their home might not be worth what they think. They could then lower the asking price to the same value as the appraisal, clearing the way for the VA loan to go through.
Cover the ‘appraisal gap’ in cash
Another possibility is that you, the home buyer, cover the additional costs that exceed the mortgage loan. There’s a good chance you’ll have to cover the costs from out of pocket, meaning cash, if the downpayment is too low or if no downpayment is being paid at all.
Split the gap between buyer and seller
Then there’s the compromise between buyer and seller to split the additional costs equally. So, in our scenario where an additional $10,000 is owed, the seller would reduce the purchase price by $5,000 and the buyer would make up the additional $5,000.
Negotiate the extras
Along with these options, there are other ways to reduce the cost of the home. It’s common for home sellers to include appliances and/or furniture with the sale, including the costs in the total price. Unfortunately, VA appraisers won’t include this – their job is to evaluate the value of the home without including anything in it. Choosing to let the buyer keep the appliances can lower the total cost of the loan without changing the value of the house.
If all else fails, walk away
If there’s no way around the low VA appraisal, then you should always be prepared to walk away from the deal. VA appraisers are professionals, and they have to be certified by the VA to evaluate homes. If sellers are unwilling to budge or your Realtor cannot work out a new deal, it could be in the buyer’s best interest to find a different house. It’s not the happiest of endings, but it could be worth avoiding large, out-of-pocket payments just to get the specific home.
Common VA appraisal problems & what to do
A VA appraisal is a critical part of the homebuyer process for veterans. The hope is that you encounter no issues and sail smoothly to closing. But some VA buyers will face appraisal problems.
Here’s what to do if you run into VA appraisal problems:
Repairs ordered
The Department of Veterans Affairs requires that all properties meet a list of ‘Minimum Property Requirements.” This list aims to make sure that veterans are moving into homes that are safe, sound and free of any living hazards.
Unfortunately, some homes will not meet these basic criteria. With that, the VA appraiser may order repairs before closing can occur.
If the appraisal comes back with ordered repairs, it is important to be open with the seller. Ask your real estate agent to share the list of required repairs. Let them know that you are unable to move forward with the home purchase unless these repairs are completed, due to the restrictions of the VA loan. In some cases, the seller will comply easily with the repairs or negotiate a new price that factors in the repairs for a smooth closing.
If the seller is unwilling to complete the repairs, then a VA homebuyer will not be able to move forward with the purchase.
Low appraisal value
The fast pace of the current market means some homes may be appraised low. If you receive a low appraisal, you can ask for a Reconsideration of Value from the VA.
If the reconsideration doesn’t affect the appraisal value, negotiating with the seller for a better price is an option. But in a hot market, most sellers will be unwilling to leave any money on the table.
If this happens, you have the option to make up the difference in cash. However, that may amount to more money than you have available. You may have to walk away from the sale if you’ve exhausted all of your options.
How to avoid VA home appraisal issues
VA appraisals aren’t as complicated as they may seem. There are early signs homebuyers can find to tell if a home will clear an appraisal or not. Here are some tips to find out more about how to avoid VA appraisal issues during the home buying process.
The VA appraisal process doesn’t need to be intimidating so don’t let it deter you from taking advantage of one of the best mortgage products on the market.
VA appraisal FAQ
Are VA appraisals typically low?
No, VA appraisals are not typically low. If you are looking at a VA mortgage, you may have heard the myth that VA appraisals are typically low. The good news is that is not the case. When an appraiser shows up to determine the value of a home, they aren’t looking at the type of loan you want to use. Instead, they are looking at the home’s features to determine its value.
How often do VA appraisals come in low?
Like any other type of appraisal, VA appraisals can come in lower than you expected. The unfortunate reality is that some homes are overpriced by the seller.
According to Fannie Mae, appraisals come in low around 8% of the time. With that, borrowers seeking a VA loan may find their appraisal comes in low. But borrowers with other types of loans are in the same boat.
How do I fight a low appraisal?
If a VA appraisal comes in low, you have the chance to appeal. Whether you are the buyer or seller, you can request a formal Reconsideration of Value.
With this, you may present facts about the property that the original appraisal may have overlooked. A few important facts could be recent sales of comparable homes in the area, errors on square footage, omitted upgrades, and more.
To challenge an appraisal, you can present these facts to the mortgage lender in writing. At that point, the original appraiser will consider the information. They may or may not adjust the appraisal amount. If the appraised value isn’t raised, you can ask for a letter detailing their reasoning.
If you are seeking a valuation change of more than 10%, the lender will send the request to the Department of Veterans Affairs. In that case, a member of the agency will review the original appraisal and submitted facts to issue a revised value.
What happens if the appraisal comes back low for the buyer?
If the appraisal comes back low, the lender will not lend more than the appraised amount. With that, the buyer will have the opportunity to make up the difference. The buyer can negotiate with the seller for a lower price or pay the difference out of pocket.
Does the borrower have to complete the sale if the appraisal comes in low?
If a home’s appraisal is lower than expected, the buyer may be able to walk away from the sale if there is a contingency clause in place. The contingency would allow buyers to not complete the sale without losing their earnest money.
With this in mind, a buyer should never waive their appraisal contingency unless they are willing to make up the difference out of pocket or lose their earnest money.
Is a second VA appraisal possible?
If a VA appraisal comes back with a significant error, you can challenge the report. In some cases, you can present facts about the property that the original appraisal may have overlooked. For example, the appraiser may have missed the fact that you are on city water or have miscalculated the square footage of your home.
With this document submitted, the appraiser may reevaluate their determination and adjust the property’s value. If not, you can appeal to the Department of Veterans if you are trying to adjust the property’s value by more than 10%. At that point, a VA employee will look at the documents to reissue a valuation.
If you are pursuing a VA Streamline Refinance, an appraisal isn’t required by the VA. However, your lender will likely require an appraisal to finalize the loan.
The reality is that, much like that red wine stain on the rug, Sallie Mae student loans aren’t likely to evaporate into thin air. That’s because Sallie Mae is a private lender now.
And despite what you may have heard, there is currently no such thing as private student loan forgiveness.
Forgiveness is limited to federal education loans, and even then, the options are few. There are federal student loan forgiveness programs for those who go into public service or teaching. But other than that, it’s extremely difficult to cancel student loans.
Table of Contents
• Can Older Sallie Mae Loans Be Forgiven?
• What If You Don’t Qualify for Loan Forgiveness?
• Are There Alternatives to Private Student Loan Forgiveness?
• Can You Refinance Sallie Mae Student Loans?
Can Older Sallie Mae Loans Be Forgiven?
If you’re confused about whether your Sallie Mae loans are private or federal, it may be because the company has evolved over the years.
Though Sallie Mae, aka the SLM Corp., no longer services federal loans, that wasn’t always the case.
Sallie Mae was created in 1972 as the Student Loan Marketing Association, a government-sponsored enterprise that serviced federal education loans. Even though it became fully privatized in 2005, the company continued to service federal loans made under the Federal Family Education Loan (FFEL) Program until that program ended in 2010. Then, in 2014, Sallie Mae split into two companies: SLM Corp. and Navient Corp and shifted all its federal student loans to Navient.
So, if you have an older loan — one that originated before 2014 — it may have been a federal loan that started out with Sallie Mae and then moved on to Navient. And if that’s the case, you may be able to apply for Sallie Mae loan forgiveness.
Applying can be complicated, and you may have to consolidate your loans into a Federal Direct Consolidation Loan as part of the process.
You can see if your old debt is a federal education loan by visiting the Federal Student Aid website. If it is, and you want to seek loan forgiveness, you’ll eventually make your application to the government.
Keep in mind that Navient shifted federal student loan accounts to Aidvantage, a division of Maximus Federal Services, after Navient cut ties with the Department of Education in late 2021.
You can contact your current loan servicer for information on how to get started.
Recommended: How Do Student Loans Work? Guide to Student Loans
Take control of your student loans. Ditch student loan debt for good.
What If You Don’t Qualify for Loan Forgiveness?
If federal student loan forgiveness seems a long shot for you, don’t despair — you also may want to look into deferment or forbearance. These strategies allow qualifying borrowers to temporarily reduce or stop their federal student loan payments. However, depending on the type of federal loan you have, interest may continue to accrue while payments are paused, which could increase the overall cost of the loan.
Looking for a more long-term solution? An income-based repayment plan can offer qualified applicants another way to lower federal student loan payments. The four options limit how much money you put towards student loans each month based on family size and discretionary income (the difference between your annual income and 150% of the poverty guideline for your family size and state of residence).
You can contact your loan servicer for assistance with federal loan repayment. If you don’t know who your servicer is, you can find out by visiting your Federal Student Aid dashboard or calling 800-433-3243.
Are There Alternatives to Private Student Loan Forgiveness?
Although there currently is no such thing as Sallie Mae private student loan forgiveness, there are alternatives available to borrowers struggling to manage their private loans.
Private lenders don’t offer income-driven repayment plans. But if you feel comfortable calling Sallie Mae (or any lender) directly, you could ask about other repayment plans they might offer or what ideas they might have for your situation. At the very least, it doesn’t hurt to learn more about your loans.
And some lenders, including Sallie Mae, offer deferment and forbearance for those who qualify.
The timeline and cost for each of these programs may vary by lender. Sallie Mae, for example, may require a “good faith payment” to go into forbearance, and you can press pause on payments for only three months at a time, for a maximum of a year.
Something else to consider if you’re thinking about deferment or forbearance is that — just as with federal loans — even though the payments are paused, interest may continue to accrue. And this can increase the total cost of the loan.
Recommended: Private Student Loans Guide
Can You Refinance Sallie Mae Student Loans?
If you can’t make any headway with your current repayment plan, you can always look into refinancing student loans.
Though there are advantages to refinancing student loans, there are potential drawbacks to consider. For instance, if you refinance your federal loans through a private lender, you may give up some important benefits, such as access to the payment pause and federal repayment programs.
Sallie Mae doesn’t offer student loan consolidation and refinancing anymore, but you could potentially reduce your interest rate by refinancing your student loans with a different private lender, especially if you have a good credit history and strong potential earnings.
If you’re approved, the new lender will pay off your old loans and issue you one new student loan — hopefully with a lower interest rate. A lower rate can save money on interest payments over the life of the loan, provided that the loan term isn’t extended.
Though you can’t combine federal and private student loans through a federal loan consolidation program, some private lenders will refinance both.
You could extend your loan term if you’re hoping to make your monthly payments more manageable, or you could opt for a shorter loan term to try to get out of debt sooner.
Recommended: Student Loan Consolidation Rates: What to Expect
The Takeaway
Lender Sallie Mae used to offer federal student loans, and if you received one, you may be able to qualify for loan forgiveness. But federal student loan forgiveness can be hard to get — and if you have a private student loan through Sallie Mae, forgiveness is not available. There are, however, repayment options, including refinancing your student loans.
It might be beneficial to look for a refinancing lender that offers extras. SoFi members, for instance, can qualify for rate discounts and have access to career services, financial advisors, networking events, and more — at no extra cost.
Refi with SoFi today to get flexible terms and a competitive low rate before interest rates rise even higher!
FAQ
Does Sallie Mae service federal loans?
Sallie Mae only services private student loans, though that wasn’t always the case. If you have a loan that originated before 2014, it may have been a federal loan that started out with Sallie Mae and then moved to Navient. In early 2022, Navient shifted all of its federal student loans to a new servicer, Aidvantage.
How do I know whether my student loan is private or federal?
You can visit the Federal Student Aid website; information about your federal loans will be listed in your dashboard.
What student loans are not eligible for forgiveness?
Private student loans are not eligible for forgiveness.
SoFi Student Loan Refinance If you are looking to refinance federal student loans, please be aware that the White House has announced up to $20,000 of student loan forgiveness for Pell Grant recipients and $10,000 for qualifying borrowers whose student loans are federally held. Additionally, the federal student loan payment pause and interest holiday has been extended beyond December 31, 2022. Please carefully consider these changes before refinancing federally held loans with SoFi, since the amount or portion of your federal student debt that you refinance will no longer qualify for the federal loan payment suspension, interest waiver, or any other current or future benefits applicable to federal loans. If you qualify for federal student loan forgiveness and still wish to refinance, leave unrefinanced the amount you expect to be forgiven to receive your federal benefit.
CLICK HERE for more information.
Notice: SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income-Driven Repayment plans, including Income-Contingent Repayment or PAYE. SoFi always recommends that you consult a qualified financial advisor to discuss what is best for your unique situation.
SoFi Private Student Loans Please borrow responsibly. SoFi Private Student Loans are not a substitute for federal loans, grants, and work-study programs. You should exhaust all your federal student aid options before you consider any private loans, including ours. Read our FAQs.
SoFi Private Student Loans are subject to program terms and restrictions, and applicants must meet SoFi’s eligibility and underwriting requirements. See SoFi.com/eligibility for more information. To view payment examples, click here. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change. Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances. Checking Your Rates: To check the rates and terms you may qualify for, SoFi conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit. Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article. Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners. External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement. SOSL1122005
Medical bankruptcy is an unofficial term for clearing out medical debt under Chapter 7 or Chapter 13 bankruptcy.
According to the U.S. Census Bureau, Americans hold nearly $200 billion worth of medical debt. As you can imagine, medical debt can cause quite a bit of financial distress for anyone who has it.
Medical bills can affect your credit and make paying off other bills difficult. Filing bankruptcy due to hefty medical bills may help you eliminate your medical debt and have a fresh start, but it isn’t always a perfect solution. Here, you’ll learn what medical bankruptcy is and how it works so you can decide if it’s the right choice for your situation.
What does medical bankruptcy mean?
“Medical bankruptcy” isn’t a legal term used in bankruptcy court, but it’s often used unofficially to describe filing for bankruptcy to eliminate medical debt. The most common forms of bankruptcy for individuals struggling with medical debt are Chapter 7 and Chapter 13—they have some similarities as well as differences for discharging debt.
Can you discharge medical debt in bankruptcy?
Both Chapter 7 and Chapter 13 can help you discharge medical debt as long as you follow the court’s guidelines and are approved for the filing. When you file bankruptcy, your debts are categorized as either secured or unsecured debts. Secured debts are types of debts for which you provide collateral or a down payment, like a home or a vehicle. Credit cards and other non-collateralized debts are unsecured debts.
Medical bills fall under the unsecured debts category, which gives you more options when you’re filing for bankruptcy. For example, if you’re approved for Chapter 7 bankruptcy, you may be able to have the entirety of your medical debt eliminated.
Which type of bankruptcy should you file for medical debt?
Choosing which form of bankruptcy to file depends on your unique circumstances as well as what the courts will approve. The primary difference between Chapter 7 and Chapter 13 bankruptcy is that Chapter 7 allows you to eliminate debt after liquidating some of your assets. With Chapter 13 bankruptcy, you’re provided with a repayment plan to pay off debts over time.
How to file Chapter 7 bankruptcy for medical debt
To qualify and file for Chapter 7 bankruptcy, you’ll need to pass a means test. The means test is when the court takes a look at your household income compared to the average in your state. If you’re below a certain threshold, you can file for Chapter 7. When people ask, “Does bankruptcy clear medical debt?” they’re usually referring to Chapter 7.
During a Chapter 7 bankruptcy, you’re assigned a trustee who evaluates your financial situation and your assets. For assets that don’t fall under your state’s specific exemptions, you may be required to sell them in order to pay back a portion of your debt. Once the assets are sold to pay back creditors, the remaining debt is removed.
How to file Chapter 13 bankruptcy for medical debt
People with a steady source of income typically file Chapter 13 for their medical bankruptcy. If your medical condition isn’t preventing you from working and receiving regular pay, this may be your best option for bankruptcy.
Under a Chapter 13 bankruptcy filing, you submit a proposal to the courts, which is based on your income. The proposal contains information on how much you believe you can pay on a monthly basis. You’re given a three-to-five-year timeline to repay your debts based on the court’s decision. Once your repayment plan is complete, the court discharges your bankruptcy.
Alternatives to filing medical bankruptcy
Medical bankruptcy is an option that many people turn to, but it can affect your credit for seven to 10 years. Derogatory marks on your credit can make it difficult to apply for loans, and it can also result in putting down larger deposits when renting a home or turning on utilities.
Before filing for medical bankruptcy, here are some alternative ways to pay your medical bills and avoid bankruptcy:
Sell assets: Yes, this is part of Chapter 7 bankruptcy, but it does not affect your credit if you do it on your own. You can use these funds to pay down your medical debt.
Borrow from a friend or family member: This is typically a good option to avoid interest, but medical debt doesn’t accrue interest. It still may be helpful to avoid the debt going to collections.
Settle your debt: Much like other forms of debt, you may be able to call and negotiate with your medical debt creditors to settle the debt for less.
Consolidate your debt: Debt consolidation allows you to combine multiple medical bills into one, which can help reduce the number of creditors you have and make repayment more manageable.
Find extra sources of income: Depending on your medical condition, it can be helpful to work additional hours or find side work to pay down your debt.
FAQ
The following are some of the most common questions when it comes to medical bankruptcy.
What is the difference between bankruptcy and medical bankruptcy?
Technically, there’s no difference between bankruptcy and medical bankruptcy. While medical bankruptcy isn’t a legal term, you can claim medical debt when you file for bankruptcy.
How long does medical bankruptcy last?
Chapter 13 bankruptcy takes three to five years to repay your debt, and it remains on your credit report for seven years. Chapter 7 bankruptcy can take four to six months and will stay on your credit report for 10 years.
How does medical bankruptcy impact credit?
Medical bankruptcy affects your credit score, so it’s helpful to understand the downsides of filing for bankruptcy. Chapter 7 bankruptcy stays on your credit report for 10 years, while Chapter 13 bankruptcy only lasts for seven.
As long as a bankruptcy is on your credit report, it hurts your credit and is also a red flag for lenders and anyone else who checks your credit. This can result in loan rejections as well as higher deposit requirements when you rent or start a utility service.
Can you claim medical debt on bankruptcy?
Yes. You can claim an unlimited amount of medical debt when you file for bankruptcy.
Does a medical bankruptcy affect your spouse?
If you’re married, your medical bankruptcy can affect your spouse, even if you file alone. Your spouse’s assets may need to be liquefied under Chapter 7 bankruptcy, but if you file individually, your bankruptcy will not affect their credit.
How to repair your credit after medical bankruptcy
Medical bankruptcy may be the best way to get back on your feet financially, but it can also affect your credit for years to come. If you’re planning on buying a home or car, or if you’re hoping to make other big purchases using credit, it can be difficult to get approved for these.
Lexington Law Firm has a team of legal professionals who can help you repair your credit. We have different credit repair services like credit monitoring and financial education tools to help you on your journey to rebuilding your credit. To learn how Lexington Law Firm could assist you, contact us today.
Note: Articles have only been reviewed by the indicated attorney, not written by them. The information provided on this website does not, and is not intended to, act as legal, financial or credit advice; instead, it is for general informational purposes only. Use of, and access to, this website or any of the links or resources contained within the site do not create an attorney-client or fiduciary relationship between the reader, user, or browser and website owner, authors, reviewers, contributors, contributing firms, or their respective agents or employers.)
Reviewed By
Vince R. Mayr
Supervising Attorney of Bankruptcies
Vince has considerable expertise in the field of bankruptcy law.
He has represented clients in more than 3,000 bankruptcy matters under chapters 7, 11, 12, and 13 of the U.S. Bankruptcy Code. Vince earned his Bachelor of Science Degree in Government from the University of Maryland. His Masters of Public Administration degree was earned from Golden Gate University School of Public Administration. His Juris Doctor was earned at Golden Gate University School of Law, San Francisco, California. Vince is licensed to practice law in Arizona, Nevada, and Colorado. He is located in the Phoenix office.
There are plenty of reasons active-duty service members and veterans prefer to use VA loans. With the benefit of the VA guaranty, home buyers are able to get a home without having to make a down payment. This is thanks to the VA’s commitment to 100% financing.
But what happens if the home is being sold for more than the VA is willing to commit? This can happen, specifically when the VA appraisal doesn’t come back the way the buyer and the seller expected.
This is where the VA’s little-known “mandatory escape clause” comes in.
Click to check today’s rates (Apr 26th, 2023)
The VA Mandatory Escape Clause
The VA wants to protect its members, and one of the ways it does that is with the mandatory escape clause.
The mandatory escape clause states that a home buyer does not have to follow through with a purchase if the VA appraisal comes in lower than the asking price for the home.
What’s more, the escape clause even protects the home buyer from any fees or penalties.
According to the VA, “It is expressly agreed that, notwithstanding any other provisions of this contract, the purchaser shall not incur any penalty by forfeiture of earnest money or otherwise or be obligated to complete the purchase of the property described herein, if the contract purchase price or cost exceeds the reasonable value of the property established by the Department of Veterans Affairs. The purchaser shall, however, have the privilege and option of proceeding with the consummation of this contract without regard to the amount of the reasonable value established by the Department of Veterans Affairs. (Authority: 38 U.S.C. 501, 3703(c)(1))”
In other words, the home buyer is allowed to back out of the purchase without incurring any type of penalty, whatsoever.
Who does the escape clause help?
With some loan products, backing out of a deal can mean penalties. For buyers looking to save as much money as possible, that’s a good thing.
In a hot market where homes are selling for way above market prices, low appraisals are more common. With other loan types, the buyer would have to include an appraisal contingency in their offer to ensure they can back out of the sale in the event that the house does not appraise for the purchase price. These contingencies can make an offer less attractive to a seller, especially in a competitive market. So, if you’re looking to buy a home, don’t worry about the clause; it’s there to protect you – and your earnest money – in the event that the house doesn’t appraise at the expected price.
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Can you avoid the mandatory escape clause?
Just because a home buyer signs the clause doesn’t mean they must back out if the appraisal comes in lower than the asking price.
The final part of the mandatory escape clause allows a home buyer to waive the clause and pay the additional money if they want. The only “mandatory” part of the clause is that home buyers must sign it – but that doesn’t mean they’re required to follow it.
There could be plenty of reasons why a home buyer might decide not to back out. For example, a VA appraisal that comes in barely lower than the asking price could mean just a few thousand out of the home buyer’s pocket. If that’s doable, then proceeding with the purchase might be the right move.
VA loans are largely designed to protect the buyer, but VA home buyers still have freedom in the process. The escape clause is there to protect you, but only if you want it to.
VA escape clause FAQ
What is a VA escape clause?
A VA escape clause allows a buyer to walk away from the deal if the home’s appraised value is less than the contract price. If the buyer walks away for this reason, they will get their earnest money deposit back.
Does the VA require an escape clause?
Yes, the VA requires an escape clause. With this mandatory escape clause, the buyer can back out of the deal without losing their earnest money if the home appraises for less than the contract price.
What is the purpose of the VA mandatory escape clause?
The goal of the VA mandatory escape clause is to protect a VA home buyer if a home appraises for less than the contract price. If an appraisal determines that the value of the home is lower than the contract price, the VA buyer can back out without losing their earnest money.
Since the Department of Veterans Affairs backs the VA loan, it makes sense that the government agency wants to protect the interests of veteran buyers who meet specific eligibility requirements.
Can a VA buyer waive the appraisal contingency?
You cannot waive the appraisal contingency if you are a VA buyer. The Department of Veterans Affairs requires buyers to keep both the appraisal contingency and escape clause in the contract.
If the home appraises for less than the contract price, the VA will only back a loan for up to the appraised amount. But the buyer will have the opportunity to make up the difference out of their own pocket.
When is the VA escape clause not required?
A VA escape clause is required for all VA home loan sale contracts. FHA loans have a requirement in the amendatory clause.
However, other loan types, such as conventional loans, are not subject to this requirement.
Who is required to sign the VA escape clause?
Both the buyer and the seller must sign the VA escape clause form. If you have questions about the VA amendatory escape clause for your home sale, discuss the details with your real estate agent. A qualified real estate professional can help you set the right sales price to avoid any underwriting issues due to this clause.
Does a seller have to sign the VA escape clause?
No, a seller doesn’t have to sign the VA escape clause. But by refusing to sign, the seller cannot accept the offer of the veteran buyer.
It is worth pointing out that many buyers with all kinds of loans will insist on an appraisal contingency. After all, buyers don’t want to be locked into a deal where the valuation of the property doesn’t match the sale price. With that, most sellers will decide to sign this clause even if it is not ideal.
What if buyers don’t use the escape clause?
The buyer doesn’t have to use the escape clause. However, the VA will only back the loan for up to the guaranteed amount. With that, borrowers who waive the escape clause will have to come up with the additional funds on their own.
Unfortunately, a hot real estate market may require more buyers to waive the escape clause.
That was a phrase that my father continually beat into my head harder than Lars Ulrich could pound on his bass drum (in case there is a generation gap, Lars is the drummer from the rock band Metallica).
Even though on average college graduates do earn more in the long-run and online colleges are bringing down costs, the current job market is saturated with sustainable careers that don’t necessarily require a degree.
Taking a closer look, it seems a major shift in employer priorities is occurring in certain fields, such as manufacturing and information technology (IT), where soft skills and on-the-job training are deemed more beneficial than a formal educational background.
Individuals bringing these resources to the table are now in high demand, especially since many companies now offer assistantship programs or even paid training for high-achieving candidates.
In this day and age, it just might be more about the right skills than the right schooling.
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25 Highest Paying Jobs Without A College Degree
Margin Department Supervisor
Air Traffic Controller
Automobile Service Station Manager
Real Estate Broker
Landscape Architect
Lead Carpenter
Director of Security
Elevator Mechanic
Cable Supervisor
Flight Services Manager
Freelance Photographer
Personal Trainer
Funeral Director
Commercial Pilot
Truck Driver
Nuclear Power Reactor Operator
Firefighter
Emergency Medical Technician
Railroad Jobs
Medical Coder
Information Technology Technician
Criminal Investigator
Brick Mason
Postal Service Worker
Pharmacy Technician
If you have decided to not attend a four-year college right out of high school, or are looking for a fresh start at a new career path, 25 of the highest paying careers with virtually no degree are featured below.
Looking for a fun job that pays well? Scared that the cause of unemployment may be growing? Sign up for free and see who’s hiring in 2023 at www.FlexJobs.com.
Disclaimer: While there are definitely some good paying trade jobs on this list, I still think having a college degree is worth it. Yes, tuition is high and will continue to rise, but the experience, connections, and mindset that college offers are invaluable. Now on to the jobs…
1. Margin Department Supervisor
Average Salary: $74,799
Prior Education: A finance or accounting degree is not required, but knowledge of all basic processes is needed.
On-the-Job Training: Moderate to high training and/or shadowing.
Job Description: A Margin Department Supervisor oversees a company’s credit department, which manages customer credit accounts and approves or denies credit to customers.
As would be expected, approving or denying credit sometimes involves unhappy customers, so you’ll need strong communication and negotiation skills for this role.
Since the scope of the job requires mathematical calculations as well as debt analysis and recognition of accounting principles, make sure you are confident with these basic processes. Some companies may increase pay if you have a degree under your belt.
You’ll also primarily be in charge of ensuring all department employees adhere to federal policies and regulations.
2. Air Traffic Controller (ATC)
Average Salary: $124,540
Prior Education: A college degree is not required, but the nature of the field is very competitive where experience is highly valued. A combination of progressive work experience and formal education is generally preferred.
On-the-Job Training: Rigorous training and testing is required.
Job Description: An Air Traffic Controller is required to pass rigorous testing by the FAA, which includes health checks, as well as mental stability tests. You must initiate the testing process before age 31.
Being an Air Traffic Controller has been voted the most stressful job in the United States for many years because of what the job entails on a daily basis. Air traffic controllers also often work night shifts, weekends, and even holidays.
A typical work day may include monitoring and directing in-air traffic, including routine take off/landing. Sometimes in-air emergencies must be handled, hence the high stress associated with the position.
Strong organizational and problem-solving abilities along with excellent communication skills are highly valued in this role. It does help to know someone already in the business to land a job in this field.
3. Automobile Service Station Manager
Average Salary: $45,204
Prior Education: High school diploma or equivalent. Some employers may prefer a Bachelor’s degree in management or similar field and/or several years of experience in automotive service management.
On-the-Job Training: Most can obtain this type of position by working one’s way up the ladder through on-the-job experience. Obtaining certification may also be required.
Job Description: Essentially, the role of the Service Station Manager is to run the day-to-day operations of a gas station.
The scope of the work includes setting the gas prices for the day, scheduling and training the rest of the employees who work at the station, ordering new merchandise to keep the shelves stocked, ensuring service station safety, as well as being the direct manager for the other employees.
Some skills that would be helpful in obtaining this job would be good personal skills as well as some managerial and accounting experience.
4. Real Estate Broker
Average Salary: $56,730
Prior Education: High school diploma or equivalent. However, a college degree in finance or related field may prove beneficial.
On-the-Job Training: Even though you must take a couple of classes to obtain your certification, these courses are much less of an expense compared to financing a college degree. Licensure requirements typically vary from state to state.
Job Description: To become a real estate broker you will still need to take a couple of classes to become certified. But still, these courses are still much less of an expense to you compared to financing a college degree.
You will be trying to sell houses as well as filing the paperwork for the transactions. In addition, you will help customers with their loan agreements.
However, if you are considering this career, you should be very friendly and have flexible hours since you will most likely be working on your customers’ schedules.
You typically are self-employed setting your own hours and working on a commission basis. Good negotiation skills along with market research experience will prove helpful in this role.
5. Landscape Architect
Average Salary: $65,760
Prior Education: Typically a minimum of a Bachelor’s degree in Landscape Architecture is preferred. An internship experience is highly encouraged. This job may require you to take some classes at a community college on horticulture as well as landscape design, but these types of courses are not required.
On-the-Job Training: With this career, you will have the option of whether you would like to be becoming certified or not. However, if you are certified, you will have access to larger contracts and a wider scope of work. Most states do mandate licensure, though, and the requirements vary from state to state.
Job Description: If you do not mind getting a little dirty and working hard for a living, then this might be a good career for you. Typical job duties include designing functional yet attractive outdoor spaces and parks for a variety of clients.
Landscape architects spend a large portion of their time creating blueprints and preparing cost analysis reports. You would also analyze environmental conditions for projects and even participate in restoration initiatives.
Make sure you have a good eye for design and a strong work ethic to consider this career. Understanding GIS technologies and project management is a must.
Here’s a how-to guide for starting your own lawn company and making some serious money (in turn being able to and saving some serious money, too!).
6. Lead Carpenter
Average Salary: $51,150
Prior Education: High school diploma or equivalent. Most Lead Carpenters begin their careers as skilled apprentices.
This job requires a high amount of experience in the field either through attending a trade school to master technical skills or by being an apprentice to a lead carpenter.
On-the-Job Training: By going to trade school you will actually have to obtain some type of certification, possibly making you more marketable in the field.
Often training includes learning how to expertly handle a variety of power tools, such as power drills or saws.
Job Description: Serving as an apprentice would most likely land you in a job replacing your teacher. Either way, you can be very successful in this type of career if you enjoy working with your hands.
Although highly dependent on the type of industry, job duties may include analyzing construction plans, creating project timelines, and managing and overseeing team production activities.
Carpenters often work in both indoor and outdoor settings and may need to eventually join a union.
7. Director of Security
Average Salary: $78,608
Prior Education: Typically a minimum of a Bachelor’s degree in Computer Science or related field is preferred along with years of experience in related positions.
In reality, this job will involve starting off in an entry level security position before working your way through the ranks to become the Director of Security.
On-the-Job Training: You might also be required to pass a security guard training program, but this will most likely be paid in full by the employer so the actual educational cost to you would be zero.
Depending on the company you will work for, you might also be required to pass a background check as well as some minor health inspections.
Job Description: A typical work day would include reviewing and implementing security department policies along with ensuring relevant local, state, and federal laws and regulations are adhered to. This role may also involve actively participating in training programs with the security staff.
Some good skills to have for this type of job would be some above average physical characteristics, as well as integrity to always choose what is right.
This position often involves being on-call for any emergencies after-hours, so make sure you can fulfill this requirement.
You can also try going the Police Officer route. If you decide to pursue this career, make sure you study with the Police Exam Guide.
8. Elevator Mechanic
Average Salary: $77,806
Prior Education: High school diploma or equivalent.
Just like the Lead Carpenter job, this job will most likely be acquired through a trade school degree, assistantship, or lots of years of experience. Being an elevator mechanic does have a couple more stipulations, though.
On-the-Job Training: Moderate to high training; may need to attend trade school to contract with large corporations.
Job Description: Lots of major corporations will require you to have a license and work for an insured company, which in this case would then force you to go the trade school route so that you could work on these large corporate jobs.
A typical work day would include repairing elevators and fulfilling routine preventative maintenance when needed. Installing and repairing control systems or adjusting and inspecting safety controls are other common work tasks.
Elevator mechanics should be able to identify and troubleshoot issues quickly and efficiently, and having a working knowledge of elevator mechanics is needed. Most of this industry is unionized, so make sure you are willing to join a union before entering this line of work.
9. Cable Supervisor
Average Salary: $51,112
Prior Education: High school diploma or equivalent. However, technical school education or an internship/assistantship may prove beneficial.
On-the-Job Training: A good way to acquire this type of a position is to either apply for the job with some type of managing/scheduling background or to apply for an entry-level position and work your way up by knowing the business.
Job Description: This career would be in a managerial-type setting. You would be responsible for overseeing the maintenance as well as installation workers setting up cable boxes and internet connections.
Typical work duties would also include interpreting cable specifications, troubleshooting issues with cable equipment, and also hiring and training any new cable technicians.
You would be responsible for the scheduling aspect as well as holding the workers accountable to be where they need to be.
10. Flight Service Manager
Average Salary: $64,042
Prior Education: Typically a minimum of a Bachelor’s degree in aviation management or related field is preferred. Completing an internship program is highly suggested.
On-the-Job Training: This career would most likely be obtained through lots of on-the-job experience along with obtaining certification if required.
Job Description: You would be responsible for helping schedule flight crews as well as taking care of customer complaints and filing any necessary paperwork.
This job would require great personal skills as well as lots of patience with unhappy customers. Making sure all passengers have the best onboard experience possible is of top priority for Flight Services Managers.
Airlines can be a stressful arena to work in, so if you are considering this line of work make sure you can keep your cool in the toughest of situations.
11. Freelance Photographer
Average Salary: $36,630
Prior Education: No educational experience required.
On-the-Job Training: This career typically involves both self-education and hands-on training through practice. Natural talent and creativity are highly valued in this field.
Job Description: Being a Freelance Photographer takes dedication to one’s tasks, as well as a great eye for artistic detail. This type of career may also require traveling long distances to be able to acquire the right “shot” for the right story.
In a sense, being a Freelance Photographer can take many forms, such as snapping pictures of nature for magazines, or taking pictures of stories for newspapers, or even being a paparazzi-type photographer and searching for the next big celebrity scandal.
To really make a sustainable living in this field, it may prove helpful to complete some basic business management courses, or to attend training sessions on editing or even lighting techniques.
It’s best that Freelance Photographers have good personal skills and can identify and fulfill client needs and/or requests. If you become a really good photographer, you could even sell your photos on Shutterstock to make some extra cash.
12. Personal Trainer
Average Salary: $38,222
Prior Education: High school diploma or equivalent.
This career will most likely require that you are qualified to teach proper physical fitness techniques to clients. Many Personal Trainers have strong backgrounds in nutrition, exercise science, or other related fields.
This certificate is not very difficult to obtain; however, it is relatively cheaper compared to any other type of trade school mentioned above.
On-the-Job Training: Continual through updating or expanding one’s professional certifications.
Job Description: To be successful in this line of work you will most likely want to be a very physically active person yourself, as well as have a passion for this line of work.
A typical work day would include meeting one-on-one with clients to assess their physical fitness needs with the intent of designing an individualized training program.
Personal Trainers also motivate and encourage their clients to reach and even surpass their fitness goals. As a result, good personal and communication skills are a must.
Most Personal Trainers work at gyms, private workout facilities, or provide at-home or virtual coaching services. Some decide to work both inside and outside the home to help facilitate a higher income.
Also, you can try getting your Yoga certification.
13. Funeral Director
Average Salary: $56,850
Prior Education: Educational requirements range from a high school diploma or equivalent to an Associate’s or Bachelor’s degree in Funeral Service Education or related field. Internships are also encouraged.
On-the-Job Training: Licensure is required in the U.S. before taking on a Funeral Director position, and some states may require a certain level of education or the completion of an apprenticeship.
Job Description: You do need some training to become a Funeral Director and possibly certification, but you can eventually make as much as $80,000 a year.
A typical work day would include helping families organize funeral details and complete any corresponding paperwork, such as a death certificate.
Offering counseling to grieving family members and helping to prepare the deceased body for the funeral service are other common duties.
It is important that you be able to handle the macabre, and you do need to have tact and a warm personality since you are dealing with people in difficult situations. Make sure you can accommodate a flexible schedule since visitations and funerals are often on weekdays and weekends.
14. Commercial Pilot
Average Salary: $78,740
Prior Education: High school diploma or equivalent, but most airlines now require a Bachelor’s degree as a prerequisite for employment.
On-the-Job Training: Moderate to high training is involved. Often the first step is to get your private pilot’s license. You’ll get your flight hours up and be more comfortable in the cockpit.
Job Description: Commercial Pilots fly planes for very specific reasons, such as for rescue operations, aerial photography, aerial tours, or charter flights.
Pilots generally evaluate overall conditions of aircraft, communicate with air traffic control, and monitor engines and fuel consumption, among other routine tasks. Being a team player with strong communication and observational skills is also a plus.
You’ll be spending a considerable amount of time away from home, so make sure you aren’t too much of a homebody. Fatigue and jet lag may also be experienced often.
Excellent observational and communication skills prove quite beneficial in this field of work. You can easily make more than $50,000 if you get on as a commercial pilot at the right airline.
15. Truck Driving
Average Salary: $53,199
Prior Education: Typically a Commercial Drivers License (CDL) and/or high school diploma or equivalent is preferred.
On-the-Job Training: Drivers must complete several weeks of on-the-job training.
Job Description: After completing six to eight weeks of training and obtaining your commercial driver’s license, you can make $45,000. Work your way up to becoming a trainer, and you can clear more than $70,000 a year.
Maintaining a clean driving record is crucial. Truck Drivers must adhere to all traffic laws, ensure cargo is secure for transport, and keep all trucks and equipment in good working condition.
Hand-eye coordination, visual stamina, and mental focus are important qualities to have for this type of position.
To become a Truck Driver you need a Commercial Drivers License or CDL. I recommend using both a CDL Practice Test and CDL Test Answers to help you study up so you can pass.
16. Nuclear Power Reactor Operator
Average Salary: $72,384
Prior Education: A degree in a field like engineering is required by some nuclear power plants, but you do not need a college degree to land a lower level operator job. In some cases, all you need to do in some cases is to simply pass the certification test.
On-the-Job Training: Moderate to high training is required along with possible certification.
Job Description: Nuclear power reactor operators manage nuclear reactors, monitoring them and making adjustments as necessary to ensure the safety of the nuclear power production process.
They also have to perform routine maintenance on the reactors and shutdown on very specific systems. Because the job is quite risky and requires very careful attention to detail, it pays quite well.
It also helps to become efficient in the required computer technologies involved in nuclear power plants. Make sure you can handle shift work and long hours.
17. Fire Fighting
Average Salary: $49,080.
Prior Education: High school diploma or equivalent. Any prior training in emergency medical services is a plus.
On-the-Job Training: Completing a physically demanding training program is mandatory along with other certifications.
Job Description: The starting salary for a Firefighter is often just a little more than $30,000, but you can make more than $50,000 a year depending on where you work and whether you reach a supervisory position.
Firefighters must know how to use standard field equipment, such as hoses and ladders, become proficient at providing medical attention to injured victims, and properly handle coming in contact with hazardous materials or wildfires.
Depending on which state you work in, you may need to complete specific training programs, such as high-rise building rescues.
Being a firefighter is a very strenuous and dangerous occupation, and you often must work long shifts and over 40 hours per week. To help you get physically ready for firefighting duty, I recommend you check out Pass the Beep Test, a guide to help you prepare your body for firefighting.
18. Emergency Medical Technician (EMT)
Average Salary: $33,380
Prior Education: Typically a high school diploma or equivalent and cardiopulmonary resuscitation (CPR) certification is required. Completing a postsecondary educational program is common.
On-the-Job Training: Generally there is little to no on-the-job training, but completing levels of certification are more than likely required for most states.
Job Description: If you are about to take your EMT classes to become an EMT, you will be happy to learn that the job outlooks in this field are very promising. However, chances of having a good job in the EMS are given to those who have more EMT certifications (like paramedics).
EMTs are first responders in a medical emergency, assessing victims’ conditions and possibly transporting them to the hospital by ambulance. Often people’s lives are on the line when EMTs arrive on the scene.
The hourly wages can vary from $12.08 (10% of the workforce earns less than this) to $24.77 (10% earn more than this bracket). According to the Bureau of Labor Statistics, as of 2023 the median hourly wages of EMTs was at $17.76 per hour.
19. Railroad Jobs
Average Salary: $59,780
Prior Education: Typically a high school diploma or equivalent is required.
On-the-Job Training: Several months of moderate-level training is standard. Obtaining certifications may also be required.
Job Description: Do you like trains? Do you enjoy traveling? If so, a railroad job might be just for you.
A variety of positions are available, ranging from engineers and conductors to switch operators and management positions. Railroad jobs give you a chance to see new parts of the country while getting paid very well in the process.
Since trains operate every day of the week, expect to work nights, weekends, and holidays in all kinds of weather conditions.
Hand-eye coordination, visual acuity, and communication skills are valuable assets in this industry. If you’re looking at getting a railroad job, here’s a comprehensive guide that shares how to get a job in the railroad industry.
20. Medical Coder
Average Salary: $45,035
Prior Education: Typically a high school diploma or equivalent is required, while an Associate’s Degree is sometimes preferred.
On-the-Job Training: There is little to no on-the-job-training since specific training programs are generally completed as a prerequisite for employment. Completing certifications may also be required.
Job Description: The healthcare industry is currently booming, and you can expect it to continue to rise with the Baby Boomer generation getting older. There aren’t enough doctors and nurses available.
Behind all of the doctors is a team of medical coders typing up detailed reports on what procedures you had done and billing you or your insurance company the amount owed.
According to The American Academy of Professional Coders (AAPC)’s 2022 salary survey, on average medical coders without certification bring home approximately $47,200 per year. However, becoming certified as a Certified Professional Coder (CPC) is highly sought after to seek higher pay.
21. Information Technology (IT) Technician
Average Salary: $41,305
Prior Education: Associate’s degree, Bachelor’s degree, or certificate program in computer science or related field is typically preferred. A degree is usually not required to land an entry-level position.
On-the-Job Training: Little to no on-the-job training expected since some employers require that candidates complete some level of formal training as a prerequisite for employment.
Job Description: There are a number of career paths within information technology that do not require a college degree.
Starting out you’ll probably conduct support calls on a helpdesk and only make $11-13 per hour. As your skills and experience progress and you get more experience you can easily make $50,000 to $70,000 per year as you get into systems administration and network engineering.
Typically IT technicians diagnose and repair computer malfunctions and install and maintain network systems. Get started on your IT career path by getting some online computer training and certification.
22. Criminal Investigator
Average Salary: $58,582
Prior Education: High school diploma or equivalent.
Several years of prior experience in law enforcement is encouraged. Some employers do require a minimum of an Associate’s degree in Criminal Justice or related field.
On-the-Job Training: Moderate on-the-job training is expected. Most states do require standard licensure for criminal investigators, along with a license to carry an armed weapon.
Training typically involves learning how to properly gather information and conduct remote surveillance, among other routine tasks. Reconstructing accident scenes is also a field-specific skill learned.
Job Description: Criminal investigators are the individuals tasked with interviewing and collecting evidence for specific cases.
Depending on the case at hand, you may be performing background checks, verifying facts and statements, conducting surveillance, searching online records, or gathering information on persons of interest.
You may even need to testify in court or make a physical arrest. This job is fast-paced and often involves working odd hours, weekends, and holidays.
Important skills to have include resourcefulness, inquisitiveness, and integrity. Being able to stay cool, calm, and collected during criminal investigations is integral to performing well in this role.
23. Brick Mason
Average Salary: $42,900
Prior Education: High school diploma or equivalent. Many masons also complete extensive apprenticeship programs or specific coursework before employment.
Any previous experience as a construction laborer is acceptable.
On-the-Job Training: Learning the trade is often accomplished through completing apprenticeships and/or on-the-job training shadowing experienced masons.
In these apprenticeship programs, promising candidates learn standard masonry practices, such as construction basics, measurement calculations, and safety procedures.
Job Description: Generally a brick mason uses bricks to construct walls, fences, and other structures.
A typical work day would include reading blueprints, gathering required materials, cleaning surfaces with power tools, and lifting heavy materials for proper alignment.
Brick masons often work long hours in a fast-paced and strenuous environment where becoming injured on the job is common. Protective gear, such as safety glasses, should be worn at all times.
Construction deadlines must be met, so brick masons often work indoors and outdoors in all kinds of weather. Important skills to have for this role include hand-eye coordination, physical strength, and attention to detail.
24. Postal Service Worker
Average Salary: $57,260
Prior Education: High school diploma or equivalent. An excellent driving record is a must along with a clean track record.
On-the-Job Training: There is some short-term on-the-job training involved, including passing a written exam, road test, and other standard background checks.
Job Description: Postal service workers generally collect, sort, process, and distribute mail in a timely manner. It’s their responsibility to make sure mail is delivered seamlessly.
They also sell common postal products, such as stamps, and obtain any customer signatures for certified mail.
Important skills to have for this role include a strong focus on customer service and attention to detail.
25. Pharmacy Technician
Average Salary: $31,750
Prior Education: High school diploma or equivalent. Complete a postsecondary program in pharmacy technology before employment is acceptable.
On-the-Job Training: Moderate on-the-job training is required, which typically involves passing an exam or specialized program.
You may also need to learn how to operate automated dispensing equipment, and some states may require certification.
Job Description: Pharmacy technicians are responsible for correctly filling, packaging, and labeling customers’ or health professionals’ prescriptions.
You would also be involved in organizing inventory, processing insurance claims, and accurately entering patient information into a computer database.
Having excellent organizational, listening, and customer-service skills is highly valued for this role.
Pharmacy technicians may be required to work nights and some weekends. Make sure you are physically fit enough to spend most of the day on your feet fulfilling orders.
Is Attending College Overrated?
There’s one thing I know for sure – college is extremely expensive! As the College Board highlights in a recent survey outlining changes in college tuition between 2012-2013 and 2022-2023, tuition is on a steady upward climb that shows no signs of letting up.
In 2023, public four-year in-state tuition is $10,950 for full-time students. This was a 1.8% increase from the previous college year.
There are a vast amount of careers that you can obtain without an actual college degree, but most require either a trade school certification or just time on the job and working your way up through the ranks.
“Formal education will make you a living. Self education will make you a fortune.” – Jim Rohn
Looking for a job? Scared that the cause of unemployment may be growing? Sign up for free at www.FlexJobs.com and see who’s hiring today!
FAQs on High Paying Jobs with No Degree
Are there high paying jobs with no degree?
Yes, there are several types of jobs that do not require a college degree but can still offer competitive salaries. Some examples include web developers, software engineers, medical coders, sales professionals and IT support staff.
What qualifications do I need for these jobs?
What qualifications do I need for these jobs? The requirements for these types of positions vary depending on the job and company, but often include certifications or specialized training in the field you are interested in pursuing.
In addition to technical skills, employers are looking for individuals who demonstrate strong problem solving abilities, excellent communication skills and an understanding of customer service principles.
Q: What are some high paying jobs that don’t require a college degree?
Here are some examples of high paying jobs that don’t require a college degree:
-Commercial pilots: median salary of $121,430 per year -Detectives and criminal investigators: median salary of $81,920 per year -Nuclear power reactor operators: median salary of $94,350 per year -Power distributors and dispatchers: median salary of $83,020 per year -Real estate brokers: median salary of $61,720 per year -Elevator installers and repairers: median salary of $80,180 per year -Web developers: median salary of $73,760 per year -Petroleum engineers: median salary of $137,170 per year -Computer network architects: median salary of $112,690 per year -Medical and health services managers: median salary of $100,980 per year
Are there any high paying jobs that don’t require a college degree, but do require experience?
Yes, there are many high paying jobs that don’t require a college degree but do require experience. Some examples include:
-Commercial pilots: typically require several years of flight experience as a co-pilot before being considered for a pilot position. -Detectives and criminal investigators: typically require several years of experience in a related field, such as a police officer or federal agent. -Nuclear power reactor operators: require extensive on-the-job training and experience. -Real estate brokers: typically require several years of experience as a real estate agent before becoming a broker. -Petroleum engineers: typically require several years of experience in the oil and gas industry before being considered for a position as a petroleum engineer.
The terms “prequalified” and “preapproved” are often used interchangeably by mortgage borrowers, but they aren’t quite the same. Prequalifying for a home loan isn’t as involved — it simply gives you an idea of if you’ll qualify for a mortgage, and if so, how much and at what interest rate. Getting preapproved requires more legwork and indicates that the lender is committed to moving forward with the mortgage.
What is the difference between preapproved and prequalified?
Getting prequalified for a loan is easier than receiving a preapproval, which also means prequalification means less to home sellers regarding your ability to get the mortgage.
Prequalifying involves submitting some basic financial info and getting your credit checked to get a general idea of whether you can get a mortgage, how much you could borrow, and the interest rate.
For a preapproval, lenders will do a deeper dive into your financial situation and will require more documentation of the financial details you provide as well as a formal loan application. Preapprovals hold more weight and are more useful when trying to buy a home.
What is a mortgage prequalification?
Mortgage lenders give borrowers the option to see if they are prequalified.
It involves submitting some basic financial information and undergoing a credit check to determine how much house you can afford and possible interest rates you’ll qualify for.
A mortgage prequalification is only a general indication that you could be approved for a mortgage if you were to formally apply. It might be your first step in the homebuying process, and can usually be obtained with a phone call or brief online application. Learn more about the pros and cons of prequalification to see if this step makes sense for you.
What is a mortgage preapproval?
A mortgage preapproval is a letter or written statement that specifies your maximum loan amount and the lender’s commitment to fund the loan if your financial situation remains the same.
To get a mortgage preapproval, you’ll need to submit a formal loan application and provide extensive documentation regarding your income, savings and debt, such as credit cards and student loans. Your mortgage lender uses this information to determine whether to offer you a loan, and at what maximum amount and interest rate.
It’s not set in stone until the loan goes through underwriting and the information in your application is confirmed by the lender. If there are discrepancies, your loan terms could be modified, or the lender might deny your application.
While it’s more complex than prequalification, a preapproval can still be very fast. Some online lenders issue preapproval letters in minutes. Others might require a full day or even a week to review the information you submit.
Regardless of how long it takes, the wait is worth it, since you’ll need a preapproval in hand before making an offer on a home.
“Preapproval carries more weight because it means lenders have actually done more than a cursory review of your credit and your finances, but have instead reviewed your pay stubs, tax returns and bank statements,” says Greg McBride, CFA, Bankrate’s chief financial analyst. “A preapproval means you’ve cleared the hurdles necessary to be approved for a mortgage up to a certain dollar amount.”
Differences between prequalified and preapproved
No formal application required, but might require credit check
Requires formal application and credit check
Provides estimate of how much you might be eligible to borrow
Provides conditional loan approval
Relatively quick process and rapid response from lender
Could take time to gather documentation and complete application, then anywhere from a few minutes to a few business days for response
Not a viable approval, and not used when making an offer on a home
Demonstrates to home sellers you’re a serious buyer and on track to full approval
Which should I choose: Preapproval or prequalification?
Both preapproval and prequalification are indications from a mortgage lender that you are eligible for a mortgage, but a preapproval is much more detailed — and more of a guarantee.
“Because prequalification may not always lead to loan approval, it is important for homebuyers to avoid making any firm plans based on their qualification status,” McBride says. “If the mortgage lending process were a highway intersection, prequalification would be the yellow traffic light and preapproval would be the green light.”
That green light is important in today’s housing market. Since some markets are especially hot, sellers might be getting competing offers. If they’re comparing one offer without a preapproval letter to an offer that does have one, they’re likely to go with the preapproved buyer — it’s a safer bet.
While there are differences between getting preapproved vs. prequalified, both processes usually involve credit checks. Typically, these are recorded as one inquiry on your credit report if they’re done within a short window, usually 45 days.
How to get started with the preapproval process
Before you ask a mortgage lender to preapprove you for a certain amount of money, take a look at your budget to determine how much you can contribute to a down payment. Most lenders will want an idea of what you plan to cover to have an estimate of your loan-to-value (LTV) ratio.
Additionally, gather all the documentation that will be requested so you’re ready to hand it over.
Remember, just because you get preapproved or prequalified from one lender, it doesn’t mean you have to actually get your mortgage through that specific lender. Always shop around before you make the final call on a lender, because rates and terms vary. By shopping with multiple lenders, you can determine if you’re getting the best deal.
Preapproved vs. prequalified FAQ
If you can’t afford to make a cash offer on a home, you’re going to need to borrow money in the form of a mortgage to make the dream of owning a home a reality. A mortgage lender needs to review your finances and sign off on approving your loan before you’ll get the keys.
To get prequalified for a mortgage, you’ll usually only need to provide high-level financial information like basics about your income and expenses, without any supporting documentation.For preapproval, however, you’ll need to fill out a more formal application and provide documents that serve as evidence: recent pay stubs from your employer, bank and credit card statements, W-2 tax statements and anything else that shows a complete picture of your personal finances.
Because a prequalification is a less detailed process, you can usually get one quicker than a preapproval. It can even happen in a matter of minutes over the phone, or seconds online.However, you can also get a preapproval quite fast. Some lenders promise preapproval letters with turnarounds of just a few minutes. Others, though, might take a few days to get back to you. If your financial situation is more complicated — if you’re self-employed, for example, or have another reason for a deeper investigation — the preapproval will likely take a bit longer.
You should get preapproved or prequalified before you begin looking at homes. A seller will want the assurance that you’ve done the prep work — and that a bank or credit union has done enough research to feel confident about loaning you the money.
Yes. There is no requirement to get prequalified first. Instead, jumping ahead to preapproval speeds up the process and puts you closer to being fully approved.
One would think that short-term goals are pretty easy to accomplish. Oh, really?
Think again. Short-term goals can be easily put off for a plethora of reasons. Research suggests this as 91% of people fail on their New Years’ resolutions.
When it comes down to getting short-term goals done, including short-term financial goals, one must implement some strategies to stay on task and on schedule.
Let’s start out by discussing some strategies for achieving important short-term goals and then move onto some short-term financial goals that are worth your time and effort.
Grab your notepad, you’re going need it!
What’s the Difference Between Short-Term and Long-Term Goals?
Goals can have different timelines attached to them. For example, a short-term goal may take months or even years to achieve, whereas a long-term goal may take 5-10 years or more to reach. It’s important to be realistic about how much time you need and plan accordingly in order to make sure you can stay on track with your objectives.
Additionally, breaking down each goal into smaller steps can help make the goals feel more achievable. It may also be helpful to track your progress and celebrate successes along the way! More on that in a sec.,,
How to Achieve Important Short-Term Goals
A short-term goal is a goal that shouldn’t take you long to complete. Generally, I would define a short-term goal as a goal that takes roughly less than a year to complete. Many times, these goals only take a month or a few weeks. They could only take a day or two.
Short-term goals usually have a very clear path toward their completion. You know exactly how you’ll accomplish your goal – every step you’ll need to take. You can break the goal down into smaller pieces and then track your progress along the way.
It’s crucial that each of your short-term goals follow the “SMART” goal format.
What Are Smart Goals?
Setting goals can be daunting, but with the SMART framework, you can turn your aspirations into achievable objectives that will help you make meaningful progress towards your dreams! SMART stands for Specific, Measurable, Achievable, Relevant, and Time-bound.
Think of SMART as your goal-setting BFF! When you have a SMART goal in mind, you know exactly what you want to achieve, how you will measure your progress, and when you will achieve it. Whether you want to improve your finances, health, or personal growth, SMART goals can help you stay focused, motivated, and accountable.
SMART Goals
Stands For:
Specific
Clear and well-defined objectives
Measurable
Goals that have quantifiable targets
Achievable
Goals that are realistic and feasible
Relevant
Objectives that align with your values
Time-bound
Goals with specific deadlines
Unfortunately, even when you know exactly how you’ll accomplish your goal, there are a number of circumstances that can get in the way. Let’s explore how to push through these difficulties and find success.
1. Find your daily energy peak and schedule accordingly.
Unless you’re like The Rock and have seemingly unending energy and strength, your productivity will rise and fall during the course of a day. I know, you didn’t like me telling you that, but someone had to, right?
Short-term goals are best made progress on during the times of day you have high to moderate energy. If you’re saving these goals for the times of day when you’re in a slump, let’s face it: you’re probably not going to get ‘er done. Save the low energy times for leisurely activities.
Okay, so how do you find your daily energy peak? Here’s what I recommend . . . .
Set a recurring alarm when you first wake up for every 30 minutes. Every time the alarm goes off, rate your energy level on a scale of 0 (being no energy) to 10 (being high energy) in a notepad or on graph paper. You can do this for one day or you can do it for a week and average out the results.
This will allow you to see how your energy level changes throughout the day and will allow you to make better decisions regarding how you allocate your time and tasks.
I would recommend working on your short-term goals during the times of day that your energy level is a “5” or higher.
I remember when I first started this blog I was a night owl and had the most energy as the sun was going down. Today, I find mornings work better for me. The lesson? Make sure you adjust your tasks to your changing energy levels. Who knows, you might make a radical shift like me over time.
2. Work on one short-term goal at a time.
I have no idea why multitasking is so praised in our culture. Multitasking, in my opinion, slows people down and produces poor results. It’s much better to work on one short-term goal at a time.
Besides, these are short-term goals – not long-term ones. You’ll be able to get them done pretty quickly and move on to other tasks in short order.
Of your short-term financial goals, it might be worthwhile to work on the quickest short-term goals first – the ones that take the least amount of time. This will give you a few quick wins, which should motivate you to press on.
3. Eliminate distractions soldier!
During my time in the Army National Guard, I learned how to focus. In battle, there’s nothing worse than not keeping your head in the game. When enemies are nearby, it’s critical that you stay on task and don’t daydream. There are plenty of distractions in battle – some of which are set by the enemy – and they need to be avoided.
When you’re working on your short-term goals – including financial goals – you should eliminate any distractions.
When you’re working at home, there are plenty of distractions. If you have kids, you know what I mean. Now, kids are a great distraction, but you should be very careful to make sure they don’t pull you away from your other obligations.
For example, let’s say you have a monthly budget meeting with your spouse. Instead of having the meeting when the kids are running around throwing toys at you, it’s probably best to wait until they go to bed.
Other potential distractions include technology. Yes, while technology can help you accomplish your financial goals – like analyzing your investments with Betterment or Personal Capital – it can also send you alerts that aren’t relevant to the task at hand (like text notifications from your second great aunt Martha).
How do you eliminate technological distractions? Well, if you have Apple devices, it’s pretty easy to do so. On your iPhone, turn on Do Not Disturb. You can do the same thing on your Mac. This way, you can focus in peace and get some work done!
4. Dig deep to find your motivation.
Just like when you’re working on long-term goals, you need to dig deep to find your motivation for short-term goals.
Why do you want to start a budget, for example? If you don’t have a good enough reason or reasons, trust me, the number-crunching will get old fast and you’ll probably give up before you develop a working budget.
Imagine the benefits, for example, of creating a working budget. How will it improve your relationship with your spouse? How will it keep you on track with your long-term financial goals? You’d be surprised by how many motivations you can find for even the most seemingly mundane short-term financial goals.
Important Short-Term Financial Goals
Alright, you’re all geared up. You have some strategies for achieving your short-term financial goals, but which goals are worth your while? That’s what we’re going to talk about next, partner.
1. Create a budget.
Surprise! Just kidding. You probably guessed this one.
The truth is that a working budget is the cornerstone of any good financial plan. A proactive budget not only tells you what you’ve spent, but it tells you what you should and should not spend – that’s huge.
Over time, by working your budget, you’ll find ways to cut your expenses and discover new motivations for raising your income.
2. Create a system to pay your bills on time.
Thanks to technology, there are all kinds of ways to pay your bills. You might pay through your bank’s online bill-pay feature, you might pay through the merchants’ websites, you might pay using your debit or credit card, you might pay with checks – or you might pay with your smartphone!
Chances are, you’re using a variety of methods to pay your bills. But do you have a solid system in place? How will you know if your credit card expired and a merchant can’t pull money through auto-pay? Are you trusting the banks and merchants to let you know when your card is about to expire?
Sure, that might work. But perhaps it would be better to put everything into a spreadsheet so you can keep track of all of your bills and how they’re paid. You can also create reminders to pay in your favorite app!
3. Get appropriate insurance policies for your family.
Do you have life insurance? Disability insurance? Umbrella insurance? How about renters insurance? These policies are commonly overlooked.
Find the best insurance and make sure you’re covered.
Short-Term Goal Examples
If you’re looking for real life short-term goal examples, you’re in luck! I polled some fans on the Good Financial Cents Facebook page and here’s some of the best ones:
Joseph Hogue from PeerFinance101.com shares his goals:
Launch 4 short-format investing books as series in December
Publish three posts per week to each blog
Financial goals
Rebalance my portfolio allocation heading into my 40s. Still a year off (and I don’t generally try timing) but after almost 7 years of a bull market, will rebalance a year earlier and shift to new allocation
Buy and renovate another rental property (in Medellin, Colombia)
Life goals
Use social media more for personal connections and less for business (I realize the irony as I post this under my blog account)
reconnect with a couple of high school friends
start a hobby that isn’t related to personal finance or crowd-funding
Kate Dore from Cashville Skyline offers:
Reach $200K net worth by the end of 2025.
Renovate my basement to rent on Airbnb.
Earn $10K side income before next year’s FinCon.
Lose 20 pounds 🙂
Jacob Wade from iHeartBudgets.com shares his ambitious short-term goals:
Finish Kitchen Remodel by end of 2022
Pay Off Student Loans by end of 2022
Launch online course for blog in March/April 2023
MAX out Roth IRA for my wife and I in 2023
Remodel Master bath in 2023
Build deck/patio in backyard in spring 2023
Build raised bed gardens in side yard in April 2023
Get my butt into shape! Start in T-25 workout plan again
Those are some good examples of short-term goals. Here are some other examples you can use to kickstart your own short-term goal ideas:
Financial Goal
Specific
Measurable
Achievable
Relevant
Time-bound
Emergency fund
Save $10,000 in a high-yield savings account
Yes
Yes
Yes
By age 30
Retirement savings
Contribute at least 10% of your annual income to a 401(k) or IRA account, aim for $100,000 in retirement savings
Yes
Yes
Yes
By age 30
High-interest debt
Pay off $5,000 of credit card debt
Yes
Yes
Yes
By age 30
Credit score
Improve credit score to 750 or higher
Yes
Yes
Yes
By age 30
Budgeting
Create a monthly budget, track spending, and save $5,000
Yes
Yes
Yes
By age 30
Education and career
Invest in education or career development
Yes
Yes
Yes
By age 30
Investing
Invest $5,000 in stocks, mutual funds, or other investments
Yes
Yes
Yes
By age 30
Home down payment
Save $20,000 for a down payment on a home
Yes
Yes
Yes
By age 30
Estate plan
Create a will and estate plan
Yes
Yes
Yes
By age 30
Living below your means
Reduce expenses by 10%, increase savings rate by 5%
Yes
Yes
Yes
By age 30
How I Keep Track of Short-Term Goals
My short-term goals fall into two categories: Quarterly (90 day goals) and weekly goals. Each quarter I list out my goals and then make sure my weekly goals stay on point to achieving those goals.
One easy way I’ve recently implemented of staying on point is creating my weekly goals Sunday night. I’l create a note on my iPhone, but that’s only the half of it.
I then take a picture (screenshot) of my weekly goals and make that the lock screen on my phone. That way every time I turn my phone on I see the top 4-5 goals I need to accomplish that week. Here’s how it looks on my phone:
You’ll also notice I list my daily reminders of my Success Habits I do each day.
These include doing The Love Habits with my wife, writing in my Five Minute Journal, knocking out 50 push-ups, praying, and completing my Crush Your Day PDF (from my 10x Goals Accelerator course) before I go to bed.
I’ve taken achieving my short-term goals to the next level because of this powerful combination.
The Bottom Line – Short-Term Goal Examples
So, there you have it! Setting short-term goals is an excellent way to achieve your long-term vision, improve your skills, and build momentum towards success.
By following the SMART framework, you can turn your aspirations into actionable steps that will help you make meaningful progress towards your dreams. Remember, short-term goals don’t have to be boring!
Whether you’re learning a new skill, connecting with new people, or saving up for a fun adventure, short-term goals can be exciting and fulfilling.
So, what are you waiting for? Grab a pen and paper and start setting some short-term goals today!
FAQs – Short-Term Goals
Why are short-term goals important?
Short-term goals are essential for several reasons. They provide a clear direction and purpose, help you break down larger goals into smaller, manageable steps, build confidence and self-efficacy, and improve your overall productivity and performance.
How do short-term goals relate to long-term goals?
Short-term goals are an essential component of achieving long-term goals. They help you break down larger objectives into smaller, more manageable steps and build momentum towards achieving your long-term vision. By setting and achieving short-term goals, you can stay motivated and focused, improve your skills and habits, and make progress towards your ultimate goals.
How do you prioritize short-term goals?
Prioritizing short-term goals depends on your personal preferences, needs, and circumstances. Consider which goals are most urgent, important, or aligned with your long-term vision. Prioritizing goals helps you focus your time, energy, and resources on the most critical objectives and avoid getting overwhelmed or distracted.
How many short-term goals should you have at once?
The number of short-term goals you should have at once depends on your capacity and workload. It’s generally best to focus on a few goals at a time to avoid getting overwhelmed or losing focus. Prioritize your goals based on their urgency, importance, and relevance to your long-term vision.