One thing that is coming up in many of our applications is collections. Let's face it. We've all been there. We have an unexpected medical situation that insurance does not fully cover. Since most of us do not have thousands of dollars that we just can't wait to spend on medical expenses, these expenses often go into collections.
With FHA applications, the magic number is $2,000. You need to get your collections at or below this number. If it's now above that number, here's what I would suggest:
- Gather up a list of all your collections statements.
- Call each place and negotiate a lower amount that they'll accept to mark your account as settled. Collecting some money on your account is better than not collecting any.
- Go to your bank or local credit union and present them with your findings. Ask them for a signature loan to cover what you need to pay off. They'll likely want to pay the collectors directly and take your payment out of a direct deposit. Be prepared to let them do so.
Once your collections are cleaned up, you'll be in a better position to purchase a house. What's more, your credit score will start to improve.
If you need a referral to a lender, call our office and we'll put you in touch with the right people.