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pistol22cal

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Pay off collections or down payment?
I have about 10k in collections and debt total between my husband and I. Would it be better to use that as my down payment on a $75K mortgage or pay off all my debt and collections. What would help me get a better mortgage?

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I would suggest that you pay off the collection accounts as it may help you in the long run with getting approve for the loan. However I do understand that you want to have a sizeable down payment, but in this case I do not think that allowing the collections to stay on your credit file will help you to get a mortgage loan. Hope this helps!!

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Many mortgage lenders will not issue mortgage loans if you have open collections, so you should contact the mortgage lender that you are planning on using to ask them if open collections are ok with them. While it is both important to have a sizeable down payment and a clean report, you may have to take care of the collections first and then save up some more money for a down payment. Whenever you deal with the collections make sure that you try to get "pay for delete" agreements prior to paying. Do some reading on "pay for delete agreements" before you go any further.

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I also read on here, from another user, that only open accounts needed to be paid off closed/charge off - do not in order to qualify for most loans. We spoke to a lender about 3 months ago and our credit was 600 and he approved us for $80 provided we pay off a $600 on my report. No mention of the $300 medical bill from 2010. I didnt know what he meant by it was too old but i do now. My husbands credit only has 1 credit card that is bad and a student loan. We are going to pay off the credit card and get a deferment for the student loan. SOOOO, we should both be in the 640 range when done by Dec. and can probably get his VA loan.

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