Prefer to talk in person? Find a mortgage specialist on Zillow
Profile picture for GrimseyGrimsey

Can you finance a home with an unpaid medical collection bill ($1900)?

I am at the end of purchasing my home and the lender lets me know there is a collection for an old medical bill of $1900 for my son. Do you think they underwriter will let this slide if I make them payments? With all of the fees for the home I can't pay for that medical collection in full before the closing date. I'm just wondering what to expect or if I have a chance. I'm in Washington State (USDA Loan)
  • December 02 2011 - Lakewood
  • 0
    0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Be a Good Neighbor. Be respectful and on-topic. No spam or self-promotion! See our Good Neighbor Policy.

Answers (3)

Profile picture for GMerino
The lender must determine if open collection accounts should be paid in full by the applicant prior to or at closing.  Lenders must consider the collection type, age, and its potential to negatively affect clear title to the subject property.  If the lender determines collection accounts may remain open they must document an adverse credit waiver on the underwriting analysis.  Don't worry, best of luck to you!

Geofrey M Merino
Lending in all 50 states
  • December 07 2011
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Under USDA guidelines, the underwriter can let it slide, depending on how old it is.The best way to handle this is to write a letter explaining that it was supposed to be covered by insurance, and that you are trying to settle it with the carrier, but they are still trying to work it out. Ask for a deferral, with the promise to pay if it's not cleared up in three months. Then contact the original hospital or doctor to see if they have any record of the bill.If they don't, then challenge the bill with the collector, saying you want proof that the bill is still valid, within thirty days.That you should get you started.

Jim Pendleton - MrMortgage
  • December 07 2011
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Usually you pay the collection off at closing. DO NOT PAY IT OFF ON YOUR OWN PRIOR TO CLOSING. Your credit score will take a huge hit and then when they pull your credit prior to closing you may no longer qualify for the loan.

If it is a "prior to funding" condition you will have to pay it off at closing.

Doug
  • December 02 2011
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.