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Is it possible to get approved for a mortgage with an unpaid repo?

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Anonymous
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Is it possible to get approved for a mortgage with an unpaid repo?

Assuming scores are all above 640, and you meet all other requirements (income) and there are no other major negative items on CR, can you qualify for a mortgage with an unpaid auto repo? About $9,000 debt? And let's assume it's been about 3 years since the repo?

 

Or will you have to pay it off in order to qualify?

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Anonymous
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Re: Is it possible to get approved for a mortgage with an unpaid repo?

you would almost certianly either have to have it paid off or have been making payments under a agreed upon (in writing) payment arrangement for at least a year.

 

The concern from the bank comes 2 things...

 

First and foremost is that if the lender finds out you are buying a home they will either seek a judegement or garnishment to force the issue since they know you would HAVE to pay thet prior toa new loan...Or they could just put a lien on the house after the fact.

 

Second, they are going to see your unwillingness to satisfy that debt as a sign that in a pinch you will walk away from the loan they are about to give you.

 

Basicly, banks are going to demand it paid.  You might get lucky and squeeze through, but it is unlikely. 

 

You may also get an LO/UW telling you they can get it done without paying it off, but beware, often times this is not truthful.  They like to polay on the side of best case scenario because they make no money if they do not at least try to get you approved.  After you spend alot of time and money looking and offering on a home, then you will quite likely get hit with the "we tried, but this has to be paid" talk about a week before closing....

 

One good note, is that they do not care how it is paid.  That measn you can arrange a settlement.  At 3 years old, they are likely to take substancially less than what the balance owed on it is.  Probably somewhere around 50% (maybe less if the account has been sold a couple times).  One key here is to pay it at closing.  If you pay it right now, the acocunt will update your date of last acitivity which could lower your FICO a bit and coulse you to not qualify for the loan.

 

 

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