Profile picture for melanie s

Do I have to pay $4000 medical bill to get an FHA loan?

I just paid all but two collections that are on my credit report. All the collections I paid were medical and one was an AT&T bill. I just found out that I have a $4000 bill that I never received. My address changed. The bill is almost 2 years old. I want to buy a home. I make decent money. I have one car loan, two credit cards with small limits and a small personal loan I took out to pay these debts. I tried to get a PFD before I paid these but the CA said no. This $4000 bill is not reporting on my credit report...yet. I was told by the lady at the hospital I could pay the hospital directly and not go through the CA. I have no idea what I should do. Could I be turned down for an FHA because of this bill? I live in West Virginia. I'm trying so hard to get my credit up. Now this. My score is 576. Any help will be appreciated.
  • December 03 2011 - Charleston
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Answers (15)

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Profile picture for Leanne Austin
Before paying off any debt and especially "old collections".........consult with a lender.   I see that you know your score, which means that you have most likely sat down with a lender, but never just pay something without the advice of a lender.   You could do more harm than good!  You could be bringing something to the forefront of your credit report that was so long ago that it's dropped off of your current report. Make sure you ask before you pay!! 
If the lender has asked that this $4000 be paid though, then yes you'll need to pay it. And yes, 576 does need work, but it shouldn't take too much time. Make sure the lender gives you a plan and then follow it!   You'll be a homeowner before you know it!!
  • December 03 2011
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Profile picture for user1452136
acually melanie s FHA you have to be atlest at a 640....I know this because I am closing on my home the end of the month....score was lower than yours I got to credits made payment on time never missed and in less then6 months my scores were high enough to get approved thru FHA. Hope that helps.
  • August 13 2013
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Profile picture for sunnyview
"I work with lenders who do FHA loans with no minimum FICO score"

Really? That sounds hard to believe, but why don't you do a shout out for that lender Dave so everyone can check it out. Tell me about your lender who offers a mortgage with no minimum FICO score. 

IMHO agents should not be giving mortgage advice beyond the basic. There is more than one person who has been harmed by paying off a collection only to find out that their well meaning agent was wrong. Save yourself heartache and ask a lender directly instead.
  • December 08 2011
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It is my sincere hope that some of my colleages think carefully before answering questions on these forums....don't just post a useless or harmful post for the sake of getting some exposure/business.

With today's economic conditions and challenges faced by buyers in the lending environment, it is NOT unusal at all to have a 576 credit score and no one is in a position to tell a buyer how far off they are or how poor or good that score is unless they are a mortgage professional who has actually analyzed this buyer's personal credit history. 

Melanie, you are on the right track!  I recently closed a home in Florida with a buyer who had a score just above 580 thru a division of Wells Fargo.  Working hand in hand with your mortgage professional will benefit you the most.  As Leeann pointed out, sometimes paying off certain items can be more harmful then helpful look to a local mortgage professional for the advice you need.

Best of luck to you.

Regards,
Charlene Weston
Realtor
  • December 08 2011
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I work with lenders who do FHA loans with no minimum FICO score. However, depending on your FICO score and other factors you may or may nnot need to pay the medical bill. Before you pay the bill, check with your lender. I can you you in youch with great lenders who have easy FHA qualification.
  • December 08 2011
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The actual FHA guideline is 500 to 579 credit scores with 10% down and 580 and up with 3.5% down. 

Yes, there are lenders that will do it and Wells Fargo is one. A wholesale lender that will also do it is First Mortgage Co. (However I don't believe they lend in WV.

Yes, they actually close if the applicant qualifies. The AT&T collection would actually be more problematic than the medical collection and would probably be what disqualified you.
  • December 06 2011
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.
  • December 06 2011
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Profile picture for sunnyview
Shawn I read not long ago that Wells Fargo was still allowing credit down to 580 with a larger down payment 10%+ and that other lenders could go down to 620 under specific circumstances.

Don't you think that lenders might be better qualified to answer questions about specific mortgage options instead of agents? I do.
  • December 06 2011
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Profile picture for sryan1980
640 required on FHA loans.
  • December 06 2011
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Profile picture for Leanne Austin
Melanie,
Sounds like you are on the right track!! Good for you for exploring your options and getting educated. That's the best way to get you where you want to be without losing direction!  A year out is a great plan, but don't sell yourself short........if it works into the rest of your plans, you may be able to buy sooner.  The rates that have been around for the past 6 months or so couldn't be better. Talk out there all the time is that we will start to see an increase. Who knows??
Take advantage of them as soon as you can!!   Keep up with the questioning though......it's the best thing you can do to protect yourself!
  • December 04 2011
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Profile picture for Sharon Lewis
Zillow has a good page at how to fix your credit.
Here it is for you
http://www.zillow.com/mortgage/help/Mortgages-With-Bad-Credit.htm
  • December 04 2011
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Do not be discouraged whatsoever. Many direct lenders have great programs who will be able to give you an FHA loan. What you would need to do is speak with several loan officers, tell them your situation. Some banks will be able to work with you and others would not be able to. You can be helped so dont think this is the end of the world. Once you work with the right lender, within a few months from now, I'll say, you'll be ready to buy. Good luck to you and I wish you the very best!
  • December 03 2011
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Profile picture for melanie s

I know that my 576 credit score is poor. That's why I am trying to fix my credit. I plan to buy in one year.

  • December 03 2011
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You should work on your credit before you attempt to purchase. Sit down with a lender in your area and come up with a plan of attack. 576 is a pretty poor score.
  • December 03 2011
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576?  you are a long long way away from an FHA loan
  • December 03 2011
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