Clarification on FHA Judgement Payment Plan

[epigurl4credit]

Hello!

I am looking for clarification on the FHA  judgement payment plan stipulation. Apparently judgements need to have been paid for at least 3 months.  Do payments made via wage garnishment constitute as a steady payment plan? It sounds funny, but it is a steady on time payment.

I was going to try to pay it off prior to the application, but I'm not sure I want to allocate all of my extra money towards this with 2 children in college and saving for home buying costs. It is from local  city taxes and it's about 13k. By the time I apply I will have roughly half paid.

My other thought was to pay extra in addition to the garnishment to show a commitment to satisfying the debt and to lower my income to debt ratio.

I would appreciate any of your thoughts.

Thanks!

[BrianB_The_Loan_Professor]

Yes they count - do you have the court ordered agreement stating what is owed and how it is to be repaid?

[epigurl4credit]

Sorry for the late reply. The court order just states the amount owed and that the garnishment will continue until satisfied. My payroll stated they will be taking 25% of my disposable pay.

Would it look better if I also make monthly payments on top of the garnishment?

[StartingOver10]

25% of your gross pay is a large chunk to pay out of each paycheck. It could really put a crimp on how much mortgage you can afford from a DTI perspective.

Have you tried to see the difference between having the judgment paid in full and using your gross income to calculate the amount of mortgage you can afford and the current DTI with the 25% payment in place? 

Talk to your LO to see the difference. In some markets it is the difference between buying and not buying. Just a thought.