Hello all.
My wife and I have seen significant score jumps since we began seriously monitoring and learning about credit. We want to buy a house at end of this summer. We are almost willing to settle for a higher rate and less house-just to get into a home and out of a rental. I think many will understand- we just want our own space without annoying neighbors!
Anyhow, we both have charge-offs, one is a vehicle repo/charge-off, the other is a CC. They are pretty old, both ~5 years. My concern is going to bank and wasting the time and inquiry when the LO sees charge-offs and says "no-way"
Are we a little too ambitious? Do we stand any chance of getting a mortgage? We are both within the qualifications of an FHA loan. I know the inquiry is probably not a big deal and perhaps even with a rejection we may come away with some advice on what puzzle pieces we need in place in order to get a loan approval letter.
Any thoughts on charge-offs and getting a mortgage?
Starting Score: 604
It likely depends upon their status, paid or unpaid.
That makes sense. I suppose I should note they are unpaid, one is in collection and despite the flaming I will probably get for saying this-I feel they are beyond a point of no return and we have no plan to pay them. We are in a position where paying them means using our down payment money, and leaving them unpaid may disqualify us from a mortgage. In either case waiting it out will be the best option for us. I know people will say deadbeats, or be nice and call us fiscally irresponsible, but many early 20-somethings are which is why credit cards and auto loans should not be extended to students without extremely careful consideration. Looking back I feel I was not fully aware of the implications and repercussions of defaulting on a loan. But at the time I probably felt I was. I actually feel I was taken advantage of. But others will view this differently I am sure.
You may have to wait until they fall off.
I've seen plenty of threads here where people had to meet conditions, write letters of explanation, and so on before getting mortgages. Many times paying old debts was a condition.
@frugalrican I am not sure what these debts are going for in terms of what they paid for them, however, the one in collection is with portfolio recovery. If I had read a few posts in regards to good results in the PFD department, I would call them up and offer to pay up to 50% of it. However, I do not want to restart the clock on it, I do not want to be involved in a lawsuit either. Though I believe it is out of the SOL, In Illinois there are conflicting views by the courts on the issue itself-I read alot about it 
The repo is a different story, promissary note involved and could mean within the next 5 years it could come back to haunt me.
I know why a bank would turn us down, I just wondered if others had experience with the issue.
I believe FHA has a new requirement than if the sum of all open collections is greater than $1k, they have to be paid.
Conventional doesn't have that restriction, but they'll still go under some scrutiny.
PS- Don't feel "bad" about not paying a collection. It's a financial decision, and results in specific and reasonable consequences, which happens to include problems with obtaining a mortgage 
cassembler wrote:.
PS- Don't feel "bad" about not paying a collection. It's a financial decision, and results in specific and reasonable consequences, which happens to include problems with obtaining a mortgage
+1 And sometimes it comes down to not paying out of principle. Like a post I saw on the rebuilding forums where a poster had a CA for ~$400 for not returning a VIDEO!!!
