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Health & Fitness

Back to Work Mortgage Lenders Look for Satisfactory Credit

Tips to help boost your credit before applying for the “Back to Work” home loan

Victims of the 2008 housing market crash are finally able get back on their feet with the Federal Housing Administration’s “Back to Work” home loan. The program offers a second chance for families who have faced an economic event.

According to the Huffington Post, a national survey found that there were 301,874 vacant foreclosed homes in 2013. According to RealtyTrac, there were 1.9 million foreclosed or bank-owned properties overall.

Lenders who offer the “Back to Work” program only accept borrowers who have had satisfactory credit for at least 12 months. Credit histories with late housing, installment debt payments, delinquency  and other derogatory credit issues are not accepted in the program. If you have faced a financial struggle like foreclosure, here are some tips to guide your credit score in the right direction.

Make payments on time
Although it sounds obvious, making on-time payments is what directly affects your credit score. Some credit-card companies might cancel your account after foreclosure, but as long as you continue making on-time payments, you may be able to keep your accounts. Negotiate with the company to keep your interest rates and limits where they are at. Only use credit cards for household items like groceries and gas to ensure you will be able to pay them in full at the end of each month.

Do not add to your debt
Credit experts advise borrowers not apply for additional credit until their score is at least 650. Rather than opening additional accounts, pay off existing debt or add money to a savings account. Do not automatically cancel all of your credit-card accounts, as this might further reduce your credit score. Speak with a credit or mortgage expert to ensure that you are making the right decisions with your credit cards.

Increase your income
This is easier said than done, but it doesn’t hurt to try. Look into other jobs in your career field that offer higher salaries, but don’t quit your current job until you land a new one. If you want to keep your current job, find a way to begin a part-time job on the weekends. Think of ways you could work from home doing hobbies you enjoy. Even an extra $50 a week adds up — that’s $2,600 a year to put toward housing or other expenses.

Adjust your spending habits
Creating a written-out household budget will relieve financial stress and ensure that you are not spending more than you can afford. “Back to Work” mortgage lenders require all borrowers to participate in at least one hour of housing counseling. In which, a mortgage expert will help create and assess a household budget.

Amanda Parkar has  an experience in writing on financial lending. She has been writing on various topics such as, New home buyer loans and back to work home loan program.

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