How should I handle a judgement prior to applying for mortgage loan?

[Anonymous]

I have a judgement bill of about $3K it is only showing up on my Experian credit report.  I am hoping to apply for a mortgage loan around September if my credit and score continue to improve.  My question is should I make payment arrangements now for this with the attorney office that is collecting so that come Sept. the bank will see I'm paying it off faithfully and it won't be a concern.  Or should I leave it alone and if all goes well I can pay at closing for a new home.  I guess I'm concerned about my credit score along the way.  If I make payments to the attorney office monthly will that have more of an impact on my credit score?  Please help.

Thanks in advance,

[Anonymous]

9 out of 10 times you have to have it paid off before they lender will close on your loan. You can probably make it a condition to have it paid before closing escrow on a mortgage, but honestly... just pay it off now and try to get it deleted by september(7 months away). 

Lenders don't like things that could mess with their investment i.e. liens. 

[ShanetheMortgageMan]

You could start to make payment arrangements now, and if your credit is otherwise pretty decent, and can verify the payments have been all on time in accordance with the repayment plan, it's likely an underwriter won't require the remaining balance to be paid off.  You could then either pay the remaining balance off through the closing of the loan or not pay the remaining balance and it's payment will be included in your debt to income ratio.  Paying it along the way shouldn't have any further negative impact to your credit scores, the judgment did it's damage when it was reported in the public records section.

[Anonymous]

Thank you so much for your advise,  I appreciate it.