Preparing for a New Home Loan

Get ready for the “Back to Work” program with these easy steps

Applying for a new mortgage after a financial crisis isn’t as intimidating as it may seem. After taking a few steps to prepare, you will be ready to speak with a “Back to Work” lender confidently.

Check out your credit report

According to a survey conducted by the National Association of State Public Interest Research Groups, 79 percent of all credit reports hold incorrect information. It’s more than likely that your credit report has errors. After receiving a copy of your report, go through each item to ensure that the information is correct. In particular, look for late payments that were actually paid on time. Contact the credit bureau that reported erroneous information. They are required by law to fix any errors pointed out to them, which in turn will lead to a boost in your credit score.

The “Back to Work” program requires that each participant has a 12-month credit history report that is clear of late housing, installment debt payments, delinquency and other derogatory credit issues. Borrowers with no credit score whatsoever remain eligible. Speak with a housing counselor to determine other ways your credit could get a boost before you apply for a new home-buyer loan.

Create a household budget

The FHA requires that each “Back to Work” borrower completes one hour of housing counseling at least 30 days, but not more than six months prior to submitting a new home loan application. During which, a housing expert will guide you through how to create and assess a household budget. A budget is an easy way to ensure that you will be able to pay your mortgage back on time while simultaneously keeping up with other expenses. It’s important that each family member follows and records spending in the budget.

Your counselor will teach you other great financial tips as well, such as how to avoid scams and how to better prepare for future financial shocks. Counseling is a great opportunity to ask questions about how new home mortgage loans affect the financial lives of families. A list of agencies approved by the U.S. Department of Housing and Urban Development can be found at

Research your desired lending agency

Some lenders list on their websites which documents you will need to provide to begin the home-loan process. Each lending agency runs differently; families that have faced a financial crisis will need a lender that will listen to their story. If you visit a lender that only uses a computer to determine your mortgage worthiness, search for a different agency. The FHA recognizes that a credit history report does not determine a borrower’s ability to repay a loan. “Back to Work” is offered in all 50 states, so find a lender near you that will determine if the program is right for your family’s situation.

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