01-31-2013 09:21 PM
So I have 10 or so old CC accounts in collections or CO. They will all reach SOL in 2013 and drop off my CR in 2015.
The amount of all of the accounts is $20K so I don't plan on paying all of them off. Do I need to wait for all of them to drop off my report to apply for a FHA or conventional mortgage?
In 6-12 months I will have 700+ FICO and my income is over $100K and I'll be looking to finance about $300K.
How can I find out exactly what I need to do to qualify for a mortgage? Any feedback is appreciated.
01-31-2013 10:17 PM
For FHA you cannot have any collections over $1k, and with some lenders this can be interpreted as the total of all collections use be under $1k. When are you looking to apply? As long as those are on your CR, I would not be applying for a mortgage. Also, just because the CRTP ends doesn't mean the debt goes away.
01-31-2013 10:23 PM
What you need to pay really depends on your lender.
But, just because an unpaid debt falls off your CR does not mean it's gone. It goes into your credit file.
When you apply for any credit of $150,000, insurance of $150,000 or apply for a job with an annual income of $75,000 or more, the lender can request your entire credit history. It may not be done all the time but, it can be.
I don't tell people this to scare them but to inform them of something that could be a potential roadblock.
You would need to discuss with your lender what their requirements are. Some overlook medical, some will overlook collections over so many years old. Decide what type of mortgage you want and do some research on the requirements of each one.
02-01-2013 12:43 AM
You always take some risk in relying on normal CR exclusion as a means to shield unpaid, delinquent debt from a creditor.
Particularly, as mentioned, in the case of an app for credit that exceeds $150K principal amount, as the normal credit report exclusion periods are totally exempted under FCRA 605(b). If they want to check for old unpaid delinquent debt, they can pull a full credit report.
They can also simply ask, at the time of loan app, whether you have any old, unpaid delinquent debt.
02-01-2013 07:19 AM
Thanks. That kind of changes my view and strategy. I was reading that with an FHA they want to see you paying on collections for at least three months prior to applying for financing. Is this true? Seems like the FHA guidelines and credit vary a bit by lender. Maybe it's just nest if I contact a FHA lender and ask them to help me with my strategy? I've also read that a conventionallender might have less strict collection standards and the down payment might not be that much more than an FHA?