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trying to get a home loan with collections


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hello!

 

 

My wife and i have been trying for a home loan for the past few years, we our eligible for the VA. Every year we work closer and closer on obtaining the loan, but we have collection accounts that keep haunting us. the accounts are almost 5 year old and i believe the SOL in florida is 5 years. My question would it be a better decision to start knocking down the collections or wait it out since we waited this long already? i had a couple of them get charged off and i receive a 1099-C last year. i heard horror stories about trying to get collection removed of your credit report and i not going as planned. i just want to know what you guys recommend before i start trying to settle this debt. thanks so much!

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If you want the home now you will have to knock out the collections or the mortgage won't get underwritten.  If you can wait to buy then do so and let the collections fall off.

 

Without knowing what collectors are reporting it is difficult to give more detailed advice.  If you post that information with approximate amounts and date of debt/default we can give you more detailed answers.

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I've done it both ways. Twelve years ago I bought a home under VA and they required that all debts be paid off or settled. Four years ago I bought a house for $200,000 through FHA with two debts totaling just over $75,000 and they approved me for a hundred per cent loan no money down like VA with a great interest rate. It also depends on who your underwriter is. I had two banks willing to give me that loan. If you can't get it approve through the FHA I would wait until they drop off.

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I agree with Tex - look at an FHA. They have rules that allow accounts to remain in collections, as long as your debt/income ratio is OK. Basically they apply a formula to see if you could still afford the mortgage, assuming you were compelled to pay the collection accounts (like if they sued in the future and you lost, etc.)

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