Advice on preparing for mortgage

[geekmama]

Hi all,

My husband and I are hoping to purchase a home in 2017. We will be using a downpayment assistance program and trying for FHA.Our mortgage scores are low, just breaking 600. I am trying to maximize our scores in the next six months.

We have some collections and charge offs. I am attempting PFD and goodwill on these.  There are at least two that we will not be able to pay off. One is a collection from an electric company (During my divorce I left my now ex-husband in the home with the electric bill in my name. 2 years later I received a bill for 10k) and another collection is dental and around 3k. 

How big of an issue will it be not to pay these?

[CreditInspired]

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@geekmama wrote:

Hi all,

My husband and I are hoping to purchase a home in 2017. We will be using a downpayment assistance program and trying for FHA.Our mortgage scores are low, just breaking 600. I am trying to maximize our scores in the next six months.

We have some collections and charge offs. I am attempting PFD and goodwill on these.  There are at least two that we will not be able to pay off. One is a collection from an electric company (During my divorce I left my now ex-husband in the home with the electric bill in my name. 2 years later I received a bill for 10k) and another collection is dental and around 3k. 

How big of an issue will it be not to pay these?

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IMHO, I don't think any lender will approve a mortgage with outstanding debts or collections. I think the primary reason for this is that the companies could then place a judgment on the home. 

[Anonymous]

2017 is over in 3 weeks so I assume you mean 2018?

The unpaid collections will get you denied for sure.  The only hope you may have is to arrange a long term payment agreement and see if they will remove the credit notice after you've made X on-time payments.

I left an apartment that normally had a $700/month gas bill in winter.  I forgot to change the bill to the remaining roommate's name.  5 years later I got a notice for a $7000 bill due, I freaked out.  I called the gas company and proved to them that I had moved out so they cut the bill down by $4000 and let me pay $125 a month for 2 years.  It never hit my credit reports because I was on top of it, but I did call and get them to lower it and arrange for payments.

I actually could have just paid it in full but I wanted the zero interest unreported loan from them to cover it.

In January of this year, I got a $3200 collection on my credit report for a different utility bill from that apartment.  I knew this wasn't mine but I had no evidence to show them unfortunately.  After 7 months of negotiating with the collection agency, they finally gave up and sent it back to the original creditor and it fell off my reports (in September I believe).  I called the utility company, explained my situation, faxed my moving records and that I had new utilities in an address 30 miles away and showed that I was paying those bills on time and that I always paid my bills on time when I lived in that apartment.  They lowered the collection to $1100 and I paid it over the phone with an agreement they wouldn't assign or sell the remaining balance or issue me a tax form for it.  Never came back on my reports, fingers crossed that it never does!

[geekmama]

Both debts are past the statute of limitations. And yes, I meant 2018!

[geekmama]

I hadn’t wanted to contact them until the SOL ran out. Good suggestions here.

[geekmama]

I found this article on the mortgage board. You don't have to pay all collections.

http://ficoforums.myfico.com/t5/Mortgage-Loans/FHA-changing-collection-account-judgments-amp-dispute...

[CreditInspired]

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@Anonymous wrote:

2017 is over in 3 weeks so I assume you mean 2018?

The unpaid collections will get you denied for sure.  The only hope you may have is to arrange a long term payment agreement and see if they will remove the credit notice after you've made X on-time payments.

I left an apartment that normally had a $700/month gas bill in winter.  I forgot to change the bill to the remaining roommate's name.  5 years later I got a notice for a $7000 bill due, I freaked out.  I called the gas company and proved to them that I had moved out so they cut the bill down by $4000 and let me pay $125 a month for 2 years.  It never hit my credit reports because I was on top of it, but I did call and get them to lower it and arrange for payments.

I actually could have just paid it in full but I wanted the zero interest unreported loan from them to cover it.

In January of this year, I got a $3200 collection on my credit report for a different utility bill from that apartment.  I knew this wasn't mine but I had no evidence to show them unfortunately.  After 7 months of negotiating with the collection agency, they finally gave up and sent it back to the original creditor and it fell off my reports (in September I believe).  I called the utility company, explained my situation, faxed my moving records and that I had new utilities in an address 30 miles away and showed that I was paying those bills on time and that I always paid my bills on time when I lived in that apartment.  They lowered the collection to $1100 and I paid it over the phone with an agreement they wouldn't assign or sell the remaining balance or issue me a tax form for it.  Never came back on my reports, fingers crossed that it never does!

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Wow! The things we learn that's possible. Never in a million years would I have thought about asking for a payment arrangement on an old past due utility bill. Thanks so much ABCD for sharing. This goes to show that a lot of times just communicating with a debt collector can help.