October 12, 2020 at 2:25 pm #72270
Hello! I’m new to the NACA family. Here’s a little back story on my situation. I’m currently renting an apartment and my lease ends at the end of May 2021. I have nothing in collections, no late payments, and my credit card is paid off at the moment. My fiance has one item in collections from over two years ago and student loans of about 3,000 which we have applied to start making payments.
We attended the Homebuyer workshop, uploaded everything we can to the web file, and registered for both the ADT event and an appointment with a counselor but both of those are in January 2021. With our lease ending at the end of May, my concern is that we won’t have enough time so I’m wanting to do anything I can to get approved in January.
What would you recommend we do between now and January to help us be qualified in January?October 12, 2020 at 3:40 pm #72271NelsontMember
Best advice I can give is to be over prepared. Have copies of EVERYTHING dating back at least 2 years including things that are no longer relevant like a car loan you paid off last year for instance. You probably won’t need this much but, having it will prevent an additional meeting. Upload every pay stub and bill every month. Save as much as you can even going beyond your payment shock. Have a plan B for May 2021. May is far enough out that certainly could be in your new home. But you don’t want to be in a situation where your closing date is May/June and your landlord forces you out before you can close.
You also want to make sure the collection is addressed. If it’s active regardless of when it was posted then you will be required to have it paid off or enter a payment plan and demonstrate a history of paying before you can be qualified. If it’s charged off then the charge off date needs to be at least 24 months ago.
Continue your good financial habits, have a plan B for temporary housing in the summer just in case, pay off the collection – this trips people up. It’s not when the collection was from, it’s when it was last reported.
If a collection is charged off then you will need to pay it off entirely or enter a payment plan and demonstrate a payment history before you can qualify.
If a collection was charged off then you will need to wait until 24 months after the charge off date.October 12, 2020 at 3:57 pm #72272
Thank you so much! I just want to make sure I’m understanding though. The collection item is from 2016. You’re saying it had to have got to collections before 2018? If not it needs to be paid or have payments set up? Or regardless of when it went to collections it needs to be paid and we have to wait 24 months after it’s paid. Sorry. That’s the only bit that’s confusing me is the collection stuff.October 12, 2020 at 4:05 pm #72274NelsontMember
If it went to collections in 2016 and was charged off in 2018 or before then you will be OK. You will just be asked to write, sign and date a letter of explanation.
If it went to collections in 2016 and was charged off in 2019 or 2020 you might have to wait until 24 months hits.
If it went to collections in 2016 and was never charged off (still actively collecting) then you will need to pay it off completely. In this case you will be able to enter a payment plan and you could qualify after you made about 3 payments toward the payment plan. You will however need to complete the pay off before you actually buy a house.October 12, 2020 at 4:08 pm #72275
Okay, thank you so much for clearing that up.
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