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Couple Shows Potential Homeowners How to Do It

By Sally Maison
Published: Monday, November 23rd, 2009

Many Americans aspiring to have their own home fail to take advantage of the $8000 federal tax credit because they do not meet the credit score required by mortgage lenders. But a couple in Connecticut shows how living lean can help one live the the American dream.

Couple Shows Potential Homeowners How to Do ItThe credit scores of the Shakils were far from exceptional before they bought their new home in Connecticut. Ali has accumulated thousands of debts on credit cards while in a California school before finally landing his current job as an engineer.

His wife, Zobia, also had a very low credit score when the coupled started mapping out their dream. Her poor rating was caused by opening too many store cards. She said she never missed her monthly payments but her credit score suffered because she opened and closed “special offer” cards from just about any retail store that attracted her.

Nancy Brecher of the People’s United Bank couples with a low credit score could easily buy a new home—but that was before the mortgage crisis started hitting the United States in 2007. Many American homeowners were not able to meet their debt obligations because of excessive borrowing. Additionally, lenders two years ago were more reluctant to modifications.

The next year, Fannie Mae, along with Freddie Mac, increased its required minimum credit score to 580. The two government-backed enterprises announced last September that they are raising their minimum credit score requirement to 620.

But the tighter lending requirement is not the only reason why many consumers find it difficult to get their own home. Brecher adds that mortgage lenders look into the total available credit before granting any loan. She says aside from paying off their debts, consumers must also make sure that they do not look for more. That is exactly what the Shakils did.

The couple said they have been living way below their means for the last 18 months and has managed to raise their credit score. After negotiating with their current lender, they finally were able to rip off a mortgage deal.

Zobia said she could not believe that they were finally able to secure a mortgage and had to check if the keys work because having a new home, to her, seemed too good to be true.

Experts say the couple’s case clearly shows how important it is to have a good credit score and how hard work really pays off. After working on their finances, the Shakils are about get down to business once more. This time, it is about making their 1,200 square foot dream a lovelier place for the whole family.

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