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Well, I am surprised this has recieved mixed results but it makes me hopeful. The LO I talked to a few months ago said they would run my credit, but I think he was confused about our intentions. I guess I will print out my most current reports next month and see where it gets us.
I too had Charge Offs on my report and was approved for a mortgage, no conditions from the UW. I did have to provide LOE's before it went into underwriting.
You will always get mixed responses but here is what I have experience and have knowledge of. I have a few key points you may want to read about below because I like you have unpaid CO accounts.
I am currently in underwriting for a USDA Rural Guaranteed Loan and have been approved with conditions which we are working on now. It has been said many time on this board and elsewhere that you have to have a mid score of 640 or better to be approved for the USDA loan. I have since found out through my broker that some banks will accept a mid score of 620 for USDA and that is exactly what is happening for us. Our mid score is right at 620! We have three unpaid charge offs from 2008 $5,000, $2,149, and $1,179. We are having to pay off these CO's but that is only because we did not get to a mid score of 640. Our underwriter stated and confirmed that if we had a score of 640 we would not have to pay the CO's. I do remember by broker telling me that if the CO is over 5,000 they will usually make you pay it off or pay it down to at least 5,000.
There can't be any recent lates (last year) and CO's have to be 2 years or 3 years old but I really don't remember which. Our score was in the low 500's 06/2011 and what we did was apply for three credit cards which we were able to get small credit lines. (Capital One and Orchard bank). When those three cards were added to my husbands score jumped to the high 500's. I was then able to get an unpaid CO removed which raise our score where we needed it. We were advised by our broker NOT to pay any of the CO's unless we got a PFD because it can lower your score big time. He always maintained that we needed to get our scores up so we could apply and then if required by underwriters we could pay the debts because they will not be pulling the credit again. They just require that you show proof of settlement/payment.
So if your scores are where they need to be I would definitely talk to a broker. If we had paid our CO's we would have had to wait until our scores went back up and who knows how long that would have taken.
**The FHA guidelines that others mentioned in this thread have had some adjustments made. They now will stipulate that at the underwriters descretion debts do not have to be paid as long as they were caused by "life event".
http://housingwire.com/news/fha-eases-new-rule-collections-accounts
Good Luck!
Blessed-
May I ask what state you're in, and which lender you're using?
I am in Florida. My lender will be American Financial Resources.
Thanks for the info! I'm in FL as well- Hope all goes well with the closing.
Blessed,
Thanks for sharing this information. We have the USDA application on our desk and are waiting til next month when we are hopeful my husband will have a 620 middle score. We have one charge off from 2005 (seriously going to fall off in a matter of months) and one medical collection (700 bucks) from 2008. I am willing and able to pay off the medical collection but I'd *really* prefer not to pay off the charge off since it's so CLOSE to aging off! (not to mention it's swelled to triple what was originally owed on it...)