Does it really matter?
Answer:
Send Them to DaveRamsey.com to learn what the banks don't want them to know.
Let them learn proven means of saving their financial souls.
They don't need to buy a house until they have their bills paid and lots , lots of cash.
Plus more knowledge, else they lose the house because of lack of money knowledge.
I would save the money up so you can put a big down payment on a house plus you should get lower payments that way and in a year or two you can refinance and get a lower interest rate if you pay down some of the medical bills.
If I was them, I would work on improving their credit by paying on the medical bills. They shld definately negotiate the debts if they are old, but they will have a MUCH bigger benefit in cleaning up their credit rather than putting the money in a savings account. The savings acct can not pay enough to make up for the incredibly high interest rate they will have to pay IF they get approved for a home loan in their current credit condition. The article below outlines ways they can contact their creditors and negotiate the debt themselves. Also keep in mind, that many mortgage companies require that all past debts be paid in full BEFORE they grant your loan. When I was a bill collector, we were trained that if we saw an inquiry for a mortgage loan on a credit report, we did not negotiate the bill. They had to pay it to get their home, and so why should we lower it? They had some kind of program that wld flag any dlq acct that had a recent mortgage loan inquiry on it, and it wld move to the front of our que for calls to make.
Paying bills you owe will help your credit rating when you try to buy a home. Paying off credit card debt earns you over 20% on your money. That is a much higher return than any other investment you can make. My advice is to pay off all credit card balances as fast as you can. It is like voluntarily accepting a 20% reduction in wages not to pay that off first.
if you currently have outstanding judgments or collection accounts they will usually need to settled in order to get a mortgage. THE EXCEPTION IS MEDICAL COLLECTION ACCOUNTS they may not need to be paid off in order to qualify for an FHA mortgage (each situation varies so it may depend on the rest of your situation).
as far as the rest, i don't think you should pay each one off a "small amount at a t time" the damage has already been done. save as much as you can and then call one creditor at a time and offer to settle when you have enough cash to send them one large payment. most will settle with you for 50 to 70 cents on the dollar and if you have it all you have a better chance of getting it closer to 50%.
the other issue is in order to use your new income to qualify for a mortgage there usually has to be at least one (and sometimes two) full years of employment for it to be used in qualifying for a mortgage.
if you have more questions you can call me at 1-877-472-6810 or send me an email.
good luck
Yes it matter. You should try and clean up your credit buy paying on the medical bills and any other outstanding debt that you have before applying for a loan. You don't have to pay it all just pay a small amount on them and continue to do so even after you get the loan because they can cause you problems in the future buy placing judgments on you home. And there are programs out there to assist you with the down payment go to HUD.GOV there you will also fine a number of programs to help people with bad credit get a loan or FHA.GOV. and there are grants to help you pay those medical bills, so what ever you do please find these sits.
The program is call the American Dream Down Payment Assisting Program.
The answers post by the user, for information only, BAnswer.com does not guarantee the right.
Other Questions and Answers: