Regardless of your scores, you will not be approved for a mortgage while the charged off account shows a balance.
So you need to handle it, one way or another. Since the account isn't going to fall off your report on its own until at least 2023, settling it for the offered $7,000 is probably your best bet. You may also be able to work out an installment plan with them to make it easier, such as $583/mo for 12 months, but be aware that your score won't improve much until after the final installment payment. Another option is to get a personal loan so you can pay it off in one lump sum, but the APR on that loan is probably going to be 25% or more (maybe way more), so that's not the best option if you can avoid it.
Whichever way you decide to pay the account, don't forget to ask them to agree to remove the account from your reports after they get paid. They might or might not oblige, but it's always worth asking. You should be able to qualify for your mortgage whether they delete that account or not, but your scores would be better if they do.
Total Loan Balance: $43k / $65k
Total SL: $78k
If the settlement doesnt have an expiration date before your planned mortgage app and its NOT currently updating monthly I would not settle till mortgage pulls are run then do so quickly and in full *the 7K*.
But isn't the mortgage app pretty much doomed to certain failure with an unpaid chargeoff on the reports? I can't imagine an underwriter would ever look past that.
i could be mistaken but, they could remain, just showing as paid.
