What I’ve Learned

This might be a strange blog post for this site – but last week I had a stroke.  I’m in my early fifties, and have no diabetes, don’t smoke, don’t have high blood pressure, don’t have cholesterol problems – I might not be the model of health, but nothing pointed to having this level of health problems.

I simply woke up on March 26th and felt like I was in a different body.   I can move around, if I hold on to the walls, etc, and I have double vision (which is the worse).   The other issues I have are minor – but it’s all permanent, and I’m going to be looking for “work-a-rounds.”  Here’s what I’ve learned so far about having health issues, Medical Collections and buying a home in NC.

Health Issues, Medical Collections and Buying a House

First off, with the Healthcare Bill going into effect we are seeing Underwriters requiring Medical Collections to be paid.  This is difficult for some. I know I just had 3 MRIs in a week, and I was told they cost about $5000 each, not including the readings. If you don’t have health insurance, we definitely suggest you look into the very basic you can afford, because we honestly believe that within 2 years Medical Collections – which don’t figure much into your credit score right, now will take on a much higher level of importance.

If you have Insurance, and you just figure the medical center is going to get whatever the Insurance company pays, and you let the rest go into collections – STOP.  You need to set up a payment plan with the Healthcare provider. Keep the account from going into collection.  If you want to buy a house, the goal is to have ZERO additional “bad” information added to your credit file. Make the payment $18 a month – something you can afford – just make the payments on time.

We have seen an increase of Discover Cards being offered as a way to pay off Medical Collections. Let’s say you owe a total of $3600 to 7 Medical Providers.  Taking out Credit card debt, making on time payments and clearing off the old collections is a great strategy. You CAN negotiate on older accounts for a lower “settlement” with many healthcare / Collection companies. Just be sure you get in writing that if you pay them “X” they will REMOVE the item from your credit file.  Send the funds Certified, with receipt required, and a copy of the letter from a real person that said they would remove. Then follow-up to be CERTAIN they remove it.

If you have minor (less than $500 that is over 3 years old) medical collections, in NC – FHA says the medical collections do not currently have to be paid.

However, in NC, a creditor can come after you for the debt for 5 years.  Because of this, USDA Home Loan Underwriters, in particular, require that ALL Medical Collections that are less than 5 years old be paid before you buy a house.

What Happens to Your Credit Report When You Pay Off a Collection

When you pay off Collections ( of any kind) it updates the “last activity.” That means that the credit file says, “Oh no!  Something bad might be happening!” Even if you are doing something good – like paying off bad debt, your scores will nose dive for a cycle of two. I know, makes no sense, it’s just what happens.

Because of that, if you are buying a house that is being built, for instance, and you will not be closing until next fall, we might suggest you go ahead and pay everything off now. If you are closing in 60 to 90 days, we might suggest we wait until right before closing, so that we preserve the scores.  Just know, again especially with a USDA Home Loan, you are going to be required to pay these medical collections off.  Talk to us about the best strategy for your situation.

Disability Insurance Income Buying A House

If you are in a disabled situation, and you are receiving disability – we can use that income to qualify you for a home. We must document it, and you must actually be receiving it.

If you have Chron’s Disease, for instance, which is something that might get better – we’ve had to document from the Doctor (a letter) stating that it is unlikely that your particular situation is “transient.” Why?

Because if you are having health issues, and buying a home in NC we must know that the Disability Insurance is not going to end sometime in the next 3 years.  That’s kind of the bench mark – we need to know the income is going to continue, and is reliable.

Veteran’s with VA Loan Disability income have special considerations. Many Veteran’s don’t realize that the VA will give you your disability benefits from the date of your discharge.  Depending on when that was, it could be nice little savings building up.  May of the veterans we talk to decide that they can manage their “new” mortgage easier if they use that lump sum disability check to pay down their loan amount.

Instead of borrowing $300,000 on a VA Loan – maybe you only need to borrow $250,000.  This can help, especially if you decide to move forward with your loan before your VA disability benefits are finalized, and you’ve received your first check. (might make it easier to qualify)

If you have questions about having health issues, Medical Collections and buying a home in NC please call Steve and Eleanor Thorne 919 649 5058. Thank you for your support, please know that we understand what you are going through, and want to help in any way we can.

PS  Did I mention I’m doing this with one eye shut?  If I missed proofing something – please, do not be shy about letting me know!