Qualifying For Mortgage Loan With Judgment

Mortgage Loan With Judgment

Gustan Cho Associates

Advice In Qualifying For Mortgage Loan With Judgment:

Home buyers can qualify for mortgage loan with judgment as long as they have a written payment agreement with judgment creditor and has made at least three monthly payments to the judgment creditor and can provide three months canceled checks to the mortgage loan underwriter. Some mortgage lenders with mortgage lender overlays will require that you pay off a judgment that is on your credit report before they will approve you for a mortgage loan. You can still qualify for mortgage loan with judgment but only if you have a payment arrangement with the judgment creditor.  The payment arrangement needs to be seasoned for at least three months, preferably for six months or more. You cannot just enter into a written payment agreement with the judgment creditor and pay the three months of payments upfront and qualify for mortgage loan with judgment. Mortgage lenders want to see at least three months of payment history.

Mortgage Loan With Judgment On Credit Report

Don’t pay off your judgment until you have consulted with your mortgage broker.  Paying off outstanding collections and/or judgments will cause a decrease of your credit scores. You can still get approved contingent upon paying off the judgment prior to closing.  Consult with your mortgage broker as to when you need to pay off your judgment.

Mortgage Underwriters And Judgment On Credit Report

Paying off the full judgment amount is not required by the mortgage lender.  You can settle the judgment and as long as you have a release of the judgment that is all the mortgage lender will require.  For example, if you have a judgment for $10,000 and you settled it for $2,000, that is alright with the mortgage lender as long as you have a satisfaction paid in full letter and release from the judgment creditor.

Payment Plan With Judgment Creditor

In the event if you have a payment plan with the judgment creditor, the mortgage lender will want to see proof of the payment agreement and proof of payment via cancelled checks.  The longer the payment plan has been seasoned, the more favorable it will look for the mortgage loan borrower.

I get asked many times from mortgage loan borrowers if the mortgage lender will consider the home in default if they stopped payment on their judgment payment plan after the home owner closes on their home purchase.  The answer is no.   After you close on your mortgage loan, the mortgage lender is done with your credit and financial requirements.  It is up to you to make your monthly bill payments on time.  The mortgage lender is not concerned on which bills you are late on or whether you pay them at all.  The only payment the mortgage lender is concerned with is your mortgage payment and that the home is insured and property taxes paid.

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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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