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Discussion Starter · #1 ·
We were going to be prequalified for a home loan today. Turns out we have decent scores 730 and 698.

However DH has a $3300 debt in collections. The lender said that the only way we could get a loan for the amount we'd want is to pay it off. So I called them and asked if they could lower it and I pay it off. They lowered the amount to $2490. It's a telephone bill and the lender said that generally the collectors will take about 70% from utility debts and still make money. Then they wanted my debt card or check right over the phone. I wasn't too comfortable with that. I've never had a debt and never had to deal with this. Is it normal to want payment over the phone like that? Can I trust it?

If I pay this off it puts us back to $300. I have an extra paycheck this month and we could have $1000 by the end of the month. But that'll cover the home inspection and moving truck. We were going with the VA loan, for no down payment and no PMI.

Should I shop around, or am I pretty much stuck with paying this off and waiting a few months? We could still look in the mean time I guess?
 

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Don't pay without a written agreement. If they don't put it in writing, they could come back and say you still owe money. It could take bit to negotiate the price. If you have the $2,400 tell them that you will pay it as soon as you get an offer in writing.
 

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Discussion Starter · #4 ·
Quote:

Originally Posted by SeekingJoy View Post
Are you saying you would only have $300 left after paying off this debt in collections?
In my house fund, yes.
 

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Discussion Starter · #6 ·
Quote:

Originally Posted by onlygirls View Post
I wouldn't buy a house with $300 or $1300 in the bank. You need more money.

We did a VA loan, no money down, no PMI, no VA funding fee because DH has 80% disability.
Well, I know better than that.

DH has 10% disability that we just found out about last week when we went for the certificate of eligibility.
 

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Discussion Starter · #8 ·
Quote:

Originally Posted by onlygirls View Post
10% disability might pay a couple utility bills. Have you looked at the rates for the VA? http://www.vba.va.gov/bln/21/Rates/comp01.htm

Percentage Rate w/o dependents
10% $123
20% $243

We get $1754 a month so we can rely on the disability to supplement our income. It pays our house payment and taxes.
Yeah, we have an appointment in 2 weeks to get that taken care of. It's been 8 years, and he didn't know about it. I'm not sure it's increased though, he hasn't had too many issues, probably still 10%?
 

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can you reduce the amount of your home loan and not pay off the debt? We originally wanted a 90K home loan, thinking we could NOT find anything decent below that amount. We're actually buying a place for about half that (a repo) that is not my sparkly vision of perfection, but certainly a nice place that meets our needs and has great resale potential.

good luck
 

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Well, I agree that having absolutely nothing in the bank when you become new home owners is a bad idea.

If you can't save up a down payment, you can't afford home ownership. I'm not saying you have to save up 20%, but several thousand dollars at least. This prepares you for the situation that once you own a home, you have to maintain it. The amount of money you could save for a down payment will need to be saved *every year* for maintenance. Maybe not exactly the same amount, but close. We pay about $7000/year in home maintenance in years we have to do something big (new windows, new doors, new roof) and at least $3000 in the years we have just the minor things to do (paint the mini-barn, stain and seal the deck, seed the lawn, get the trees trimmed, get the driveway sealed, have maybe one minor plumbing repair, etc.)

When you own a home you need more money than just the monthly payment... you need to put some money back for maintenance, just as you need to put some money back now for a down payment. Not to mention that you don't have an emergency fund either.

I would pay off the debt slowly, keep your money for your down payment and work on building that up. This housing market hasn't hit a low, IMHO, so you have time. Good luck!
 

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If you decide to pay off the telephone bill, do NOT give them your debit card or checking account info. Be sure to get a cashier's check or something of the sort to pay them with. I can't remember why, but Suze Orman always says this on her show.

Also, make sure that you really do owe this debt and that it hasn't passed its stature of limitations.

Good luck!
 

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I would write to the debt collection agency and ask them to validate the debt. Debt Validation is important, because they have to PROVE that there was a debt, that they have the right to collect it, etc.

they have 30 days to provide the Debt Validation, and if they don't, you can write to all 3 credit bureaus, send proof that you requested Debt Validation and received none, and they will remove the debt from the credit report.

You can google "debt validation letter" or read more that Credit Boards.com

For $3K, it's worth a try.
 
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