Qualifying For Mortgage With Charge Off Accounts With Balances

Home Buyers Can Now Qualify For FHA Loan With Charge Off Accounts With Balances

The two most important factors in qualifying for FHA Loans is credit and income. You can have low credit scores, prior bad credit, outstanding collection accounts, judgments, tax liens, and as long as you have documented income, you can qualify for a FHA Loan. However, if you have the highest credit scores possible, over 800 FICO credit scores, and perfect payment history with aged credit tradelines but if you have no documented income, there is no way you can qualify for FHA Loans. Days of obtaining home loans with no income documentations and stated income have long been gone. There are rumors that no doc and stated income mortgage loan programs may come back, however, the million dollar question is when. Bad credit mortgage loans is a huge market in the mortgage industry due to the hundreds of millions of Americans hurt by the 2008 Real Estate And Mortgage Meltdown . Every social and economic class of Americans got victimized by the Great Recession of 2008. Doctors, lawyers, teachers, fire fighters, police officers, accountants, contractors, bankers, loan officers, realtors, laborers, minimum wage hourly workers, and even multi millionaires. There are folks who have lost their entire fortune and had to start their lives all over again, especially those in the real estate and mortgage industries. Multi millionaires went to total bust and some had to start working for minimum wage. Fortunately, many have turned their lives around and have adjusted to their new financial and economic lifestyles where some found brand new careers and re-established their credit. Those who have lost their home due to bankruptcy and foreclosure can now have a fresh start in life and become homeowners again. Many of those who have bad credit and did not file bankruptcy can now qualify for mortgage with charge off accounts with balances. FHA does not require that you pay off charge off accounts with balances to qualify for a FHA Loan. Two bad credit items that are exempt by the Federal Housing Administration are charge off accounts with balances and medical collections.

What Are Charge Off Accounts With Balances?

Charge off accounts are when a creditor will write the debt off their books and charge it off. A charged off account does not relieve the debtor of the debt and the charged off account can be re-sold for pennies on the dollar to a collection agency where they will try to attempt to collect the debt. One of the most common questions I get asked everyday, not just by consumers but also by mortgage loan originators, is how mortgage underwriters treat charge off accounts with balances. There are so many rules and regulations in the mortgage industry these days that it is impossible for every licensed mortgage loan originator to know all the rules and regulations in residential mortgage lending. Many mortgage loan originators will read the FHA 4000.1 Handbook where it states that charge off accounts and medical collection accounts are exempt from debt to income qualification requirements . However, FHA 4000.1 Handbook does not explain charge off accounts with balances. The mortgage loan officer then asks their managers and underwriters and most often are told that the charge off accounts needs to have zero balances. Unfortunately, many mortgage loan officers will see that all charge off accounts have balances on them so they tell the mortgage loan borrowers that they do not qualify for a mortgage loan. You do not realize how many mortgage loan I get due to other mortgage loan officers denying the mortgage loan applicants because they have charge off accounts with balances reporting on their credit reports. The bottom line with charge off accounts with balances that report on credit reports is that all charge off accounts will have balances attached to them and this WILL NOT affect the mortgage loan borrower from qualifying for a FHA Loan. If you are told by your mortgage loan officer that you have to pay off the charge off account with balances, number one is that most of the time you cannot pay off a charge off account with balances on them because the account was written off. Secondly, the reason why there is a balance on the credit report under the charge off account is because that is the amount that was written off. If you have charge off accounts with balances and were told that you do not qualify for a FHA Loan because there is an outstanding balance there, please contact me at 262-716-8151. We will definitely get you approved with charge off with balances.

The information contained on Gustan Cho Associates website is for informational purposes only and is not an advertisement for products offered by The Gustan Cho Team @ Gustan Cho Associates or its affiliates. The views and opinions expressed herein are those of the author and/or guest writers of Gustan Cho Associates Mortgage & Real Estate Information Resource Center website and do not reflect the policy of Gustan Cho Associates Lenders Network, its officers, subsidiaries, parent, or affiliates.

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