“World's Most Complete Neighborpedia”
Sponsor a Community — What is Localism? | Register or Sign In
Explore:   What's happening in your neck of the woods?
Home Elisha Grace Apply for a Mortgage Bank Loan in Montana

Elisha Grace Apply for a Mortgage Bank Loan in Montana

Blog_tag

Delinquent Accounts on a Credit Report

07-22-11
Elisha Grace Apply for a Mortgage Bank Loan in Montana

Delinquent Accounts on a Credit Report

In my last blog post I explained what a debt to income ratio was and how it affects a loan applicant in the Delinquent Accounts on a Credit Report
qualification process for obtaining a mortgage. In my next series of posts I will lay out a plan to get out of debt so that you can breathe easier and start the process of purchasing a home.

The First step in getting out of debt is to:

Get current with all of your creditors.

Obtain a free copy of your credit report at annualcreditreport.com. You are entitled to a free report from each of the three repositories every year. Be careful with this. There are many ways to end up on some other website that wants to charge a fee to pull your credit report.

Also, to verify your identity, the site will ask you questions about yourself. Do not guess the answers to these questions if you don't know them off the top of your head. Please note that the answer can definitely be "none of the above."

If you do get locked out of the site the report will have to be requested by mail. *Please find that information below.

2. After you have obtained your credit report read through the entire thing. Highlight every account that is listed as past due, and not reporting correctly.

3. Make a list of all of the accounts that are past due.

    • Note the dates. How old are these accounts? If they are less than 4 years old it could be worthwhile to consider settling these debts. If they are older and there isn't a possibility of the creditors obtaining a judgment for payment it might be best to leave them alone.
    • If the debts are older than 7 years dispute the account with the credit agencies to have it removed from your credit report. Here is a link with instructions on how to do that written by the Federal Trade Commission: Dispute your credit report.

4. There are a couple of different options to take care of delinquent accounts on a credit report. I think that it is best to settle the account. To settle the account find the contact information at the back of the credit report or do an online search and contact the creditor directly.

    • Creditors will oftentimes agree to settle for less than the amount owed and/or possibly remove it from your report. You have to call the company and see what they are willing to do. Before you pay any amount of money obtain a settlement payoff statement from the creditor stating that the account will be paid in full after the payment has been received. Keep all proof that you paid off the account in a file in case it shows up on your credit report again.
    • If the account is recent and the creditor will not settle try to work out a payment plan with the creditor. Your goal should be to pay this account off as quickly as possible. It might be worthwhile to save enough money on your own and try to get them to settle for less than the amount you owe.

In my next blog post I will explain the next step you should take to get out of debt and get on track for home ownership.

*Request your Credit Report by Mail:

  1. Download the request form (You need an Adobe viewer to view the requested form. Download the free Adobe viewer)
  2. Print and complete the form
  3. Mail the completed form to:

    Annual Credit Report Request Service
    P.O. Box 105281
    Atlanta, GA 30348-5281

To Request your Credit Report by Phone:

  • Call 1-877-322-8228
  • You will go through a simple verification process over the phone.



Please call me at 406-890-6070 if you get stuck and need me to walk you through this step or have questions!

Elisha Grace - Loan Officer at Mann Mortgage, LLC


License: MT #175844 WY #084 ID #11627

Delinquent Accounts on a Credit Report

20 Comments
Blog_tag

Too much debt to qualify for a loan.

07-12-11
Elisha Grace Apply for a Mortgage Bank Loan in Montana

Too much debt to qualify for a loanToo much debt to qualify for a loan

Many home loan applicants think about their debt in relation to income when trying to purchase a home but don't know how much debt is too much for qualification. Every home loan applicant is evaluated to see how much debt in relation to income they have. When there is too much debt I often hear: Help! I have too much debt to qualify for a loan what should I do?

To determine a person's debt to income ratio three forms of debt are considered. It is evaluated in terms of monthly income and monthly payments. The types of loan payments that are included in this calculation are mortgage, installment, and revolving loans. Mortgage loans are monthly house payment(s). Installment loans are car loans, student loans, and personal loans. Lastly, revolving credit would be anything that doesn't have a set pay off plan like credit cards and personal lines of credit. Typically cable, utility, and cell phone bills do not count against a borrower in the debt to income calculation for qualification.

Loan guidelines have become more strict in the various programs on how much debt to income is allowed. Generally, a total debt to income ratio limit looks reasonable at 45%. However, in some cases a borrower can still borrow up to 50% and 55% of their income. This is why it is key to get prequalified by a lender before getting too excited about purchasing a home.

If a borrower qualifies at a 50% maximum debt to income ratio an example would be; a borrower makes $3000 before taxes in monthly income. Their monthly mortgage payment including property tax and homeowner's insurance, car loans, and credit cards, cannot exceed more than $1500 per month. Subsequently, if the requirement is no more than 45% then you would take $3000 x .45 = $1350 in total maximum payments per month.

If a borrower is trying to qualify for a loan to buy a house and the debt to income ratio is too high they have to think of a way to reduce their overall monthly payments. A radical change may have to happen to their financial situation and/or philosophy before they can even think of purchasing a house. Every individual and/or family has to start from somewhere. There needs to be a plan.

What is your plan for paying off debt? In my next post I will present some ideas on what needs to go into a debt reduction plan that you can manage yourself for free.

Too much debt to qualify for a loan

8 Comments