[joedirt]

I was wondering what I should do next. Ive cleaned a great deal of bad stuff from my credit report. Ive got a few things left and im not sure how to move forward. I have 4 small judgments on my CR all add up to about $3000. I have 2 collections from 10/02 about $50. And an old phone bill from 6/06 $250. I have not had credit since 02 other than a perfect car loan. No lates or anything. I really want to buy a house I saved up about $15000. My truecredit scores ar TU 616 EX 586 EQ 556. Do I have a shot at a loan and what should I knock out first the judgments or the medical collections?

[Loan Doctor]

You probably qualify for an FHA loan as things are now.
"Probably" is because some banks will not accept FHA if your mid score is under 580. If you pulled your scores from MyFico.com then you probably actually have a 580.

If you do get approved, then the lender will require you to pay off your judgment/s. DON'T DO THAT UNTIL CLOSING. (I wish I knew how to bold and under line that phrase) Why do I say that? Because your credit scores will go down when they are paid off-there are collection accounts on your credit report that will be re-aged because they are taken care of with the judgment payoff and that will make your scores go down.

In theory, at the time you get the approval, you will not have to have your credit run again, but you never know what will happen, the safe thing is to not pay things off until the last moment.

You probably won't have to pay off your collections, but same rule/s apply as to judgments.

You don't say what price of a home you are looking at, but 15K sound like a good amount for reserves etc. In todays environment, you should not have to pay any closing costs/down payment.

Thanks for asking the questions.

Charles

[Hedwig]

I fixed it so it's bold and underlined. There should be buttons for that at the top.

[jlynn]

Originally Posted by Loan Doctor

In theory, at the time you get the approval, you will not have to have your credit run again, but you never know what will happen, the safe thing is to not pay things off until the last moment.

You probably won't have to pay off your collections, but same rule/s apply as to judgments.

Charles

Ideally, we used to suggest to people to work with a broker to make arrangements to pay off whatever they required AT closing. Then you didn't have to worry about the dreaded last minute pull.

Is that still possible in today's mortgage climate?

[Loan Doctor]

Ideally, we used to suggest to people to work with a broker to make arrangements to pay off whatever they required AT closing. Then you didn't have to worry about the dreaded last minute pull.

Is that still possible in today's mortgage climate?
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Yes, that is the only way that I do loans, where the collections/judgments are paid at closing. I posted this reply the way that I did, because I help people that are working with other LO's-and in the most recent case that LO was telling this borrower that it has to be done "now". I did my best to tell that borrower to go to someone else if their current LO did not change the requirments. I don't know what happened in the most recent case-sometimes once I have answered a question I don't know what the result is.
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Funny thing is that when you say "today's environment" that is the correct way to say it. In some specific "out of the box" type of cases what was normal pre 1/07 is much different now, but generally they are the same. If a LO gets the proper approval, there is no risk that a credit report is run again before closing, but sometimes when a LO says "you are approved" that does not mean that an actual automated AUS is done. Thus my general warning to not do anything that can change your credit scores until closing.

Charles

[joedirt]

very very helpful info. I was going to contact a CHFA broker in my area in CT. The last one I went to said all needed to be paid before they could give me an approval letter. Would it be inappropriate for me to suggest I pay them at closing or should they know that already?

[Loan Doctor]

I would very nicely say to them that if they insisted that you pay stuff off before closing that you will go somewhere else.

If all Loan Officers went to all of the classes that they should go to, and kept up with every change that is going on in our goofy industry, then you would not have a worry, but that is sadly not the case. "It's your money" as the ad says and it is your responsibility to take the utmost care about one of the most valuable things you have. Your credit score.

I just had a refiance where the borrowers scores were in the 560 range. Once we have all of the things paid off/judgments and collections, their scores should end up in the 460 range. BUT, in a year they will be in the 620 range (yes, we are going to dispute these paid collections in 6 months or so-amazing how little CA's care about responding in a timely manner when there is none of their money involved)

Charles