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I am researching the USDA program and I am getting different information. What are the rules on having collections? Should I pay them off? What about a judgement?
I'm looking into this myself as one of the options for a mortgage.
My understanding is that all collections must be paid. My LO said she would use my current scores and reports with conditions so that paying the couple I have won't affect my scores when the preapproval turns into a mortgage. I'm not actually going to be getting a mortgage for several months, so I'm just paying off the two collections I have left on my reports.
A judgment would have to be paid no matter what. I'm not sure you can even qualify with an unpaid judgment, whether it appears on any of your credit reports or not.
Collections depend on the lender themselves. There are some guidelines for amounts over $2,000, unless this has changed.
If the collection is an actual judgment you will have to pay off a judgment. Medical collections they're not concerned with, but if the sum of your collections is over $1,000 they'll likely want a letter of explanation. If over $2,000, they may want the same but you may have to pay them off. Once again, it all depends on the lender issuing the USDA loan.
we close deals all the time with open collections and charge offs.
apply and see what the lender says.... come back here with your results
@ladyphillips wrote:I am researching the USDA program and I am getting different information. What are the rules on having collections? Should I pay them off? What about a judgement?
How much are they showing under balanced owed? How many are there?
That's interesting. The loan officer I'm working with has told me the collections (not charge-offs or judgments) have to be paid off before I can get final approval.
I wonder if that's just a requirement of the mortgage company, not USDA.
I actually am fine with it as they don't total too much and I want them gone anyway.