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Katerz85

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Paying off collections for FHA loan?
My husband has no collections on his credit and he got a pre-approval to buy a home. They said they could not include my income because I would have to pay off my collections first. I have 4 medical bills that total around $1500 from 4 years ago. This is for FHA home loan for our first home. Is this true, I heard paying it off could hurt your credit and additionally that they look at medical differently. I've tried to research but I keep finding different answers. Any help? Thanks!

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Katerz85, I see this situation every day.  Mortgage lenders will not approve home loans if there are unpaid collection accounts on your credit report.  If you want your income & name included on the mortgage, you have no choice but to pay the collectors.  The accounts will will still remain on your credit for 7 & 1/2 years (unless you can negotiate with the collectors - see next sentence), but they will be paid accounts with a zero balance.  If you can pay the amounts in full, try negotiating with the collectors and see if they are willing to agree IN WRITING  to remove the accounts from your report in exchange for payment.  This is known as "pay per deletion".  Good luck on your new home purchase!

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