Closed derogatory car loan

[Ljeen]

Morning, my husband and I plan on applying for a mortgage by next spring.  He and I do not have collections or judgements on our reports.  His fico score is about 758 (not sure of his mortgage score, he has to sign up here). My morgage score is 690.  I do have a derogatory for an unpaid  used car load I took out in 2012 and it shows last payment 2015 but then it states in 2017 it was bought from another lender.  The balance is 10,000 and is marked closed but nothing else about it.

 I was sold a Hurricane Sandy car who's transmission went out after only 68,000 miles. This happend during a rough time and I didn't have the money to keep up the payment nevermind buying a new or used transmission.  

I relinqueshed the car in 2015 and it's been crickets.  

Wondering if this will cause a problem especially since no one is contacting me about it. It's the only thing bad on my report.  

We want do a conventional loan so the PMI will fall off eventually. Will only be putting 3 to 5 percent down. 

Thank you in advance.   

[pgtackle2003]

I would think they would require you to be at least in a payment plan to get approved. 10k is no small amount and their concern might be you getting sued for that debt, affecting your ability to pay the mortgage. At the very least this will amost certainly be factored into your DTI. I wouldnt do anything yet until you consult a LO for wherever you plan on applying. I may be completely wrong and they may not care about it.

[Ljeen]

If I'm forced to pay this hurricane sandy (without my knowledge) busted transmission after having it a short time, I would have to use our downpayment savings to pay it off to avoid a payment plan.  Or borrow from my husband's 401k which we wanted to use for closing costs.   Don't know if this is normal to not hear a word from them but I will run it by a LO since they will see it on my report anyhow. 

Thank you.  

[pgtackle2003]

In the mortgage app process, no news is good news they say. I know how frustrating it is to hear nothing. Even if everything is good on their end it would be nice for them to tell you that's the case. I agree, to give you a peace of mind, call them up and talk about it. Like you said they'll see it anyways, so it's best to work it out as soon as you can if there is an issue.

[homeloanexpert]

I would run you through the Conventional AUS (automated underwriting system) so we know what the Findings say. That way a strategy could be put in place if necessary.

With FHA, if the tradeline shows as an open collection, then we have to hit you with a 5% imaginary payment against your DTI. That's a $500.00 payment. Ouch! That could certainly effect someone's buying power.

[Ljeen]

Oh we haven't even applied yet or have our full downpayment. That won't be until April 2020.  I'm just trying to get a feel from here if its going to be a problem. It's been closed since 2015. 

[Ljeen]

It's not an open collection. Both husband and I do not have any collections.  It shows as bad debt from 2015 and marked closed but sold to another lender in 2017 who I have not heard a peep from. (doesn't say who the lender is either). 

[homeloanexpert]

Then you should be good to go!

[Ljeen]

Thank you and I do hope so.  Its just strange that it was sold to another lender 2 years ago and I haven't heard a thing. 

[JVille]

When a Lender pulls your Credit you WILL hear from them. That’s how these folks operate. They watch & wait...