Can You Buy a Home if You’ve Had Collections?

Apr 6, 2022

Introduction

One of the concerns many prospective homebuyers in Tulsa, OK, face is the impact of previous financial setbacks, such as collections, on their ability to secure a mortgage. The good news is that having collections on your credit report doesn’t automatically disqualify you from homeownership.

Understanding Collections and Your Credit Score

Collections accounts typically result from unpaid debts that your original creditor has handed over to a collections agency. Having collections on your credit report can significantly lower your score, making it harder—but not impossible—to secure a mortgage.

Impact of Collections on Home Financing

  1. Higher Interest Rates: You may face higher interest rates due to the perceived risk.
  2. Stringent Requirements: Lenders might require larger down payments or additional documentation.
  3. Loan Restrictions: Certain loan programs may be unavailable to you.

Ways to Mitigate the Impact of Collections

  1. Pay Off Collections: One option is to pay off or settle your collections accounts, which can improve your creditworthiness.
  2. Letter of Explanation: Providing a letter to explain the circumstances around the collections can sometimes help during the loan application process.
  3. Co-Signers: A strong co-signer might help offset the negative impact of collections on your application.
  4. Specialized Lenders: Some lenders specialize in offering mortgages to individuals with less-than-stellar credit histories.
  5. FHA Loans: Government-backed loans like FHA loans often have more lenient credit requirements.

What You Need for a Successful Mortgage Application

  1. Strong Employment History: Steady employment can offset the impact of collections.
  2. Other Credit Lines: Having other, positive lines of credit can help balance out your credit score.
  3. Financial Reserves: Proof of savings or investments can reassure lenders.

The Tulsa, OK Market and Collections

Collections or not, the Tulsa real estate market offers a diverse range of mortgage options. Knowing your choices can significantly impact your home financing goals.

About Kyle Bradley, Your Go-To Tulsa Mortgage Advisor

Kyle Bradley | The Bowtie Lender VP Mortgage Banker
NMLS #488324
Kyle Bradley Mortgage
100 S. Riverfront Dr. Jenks, OK 74037
C: (918) 855-0494
E: [email protected]
www.kylebradley.com

With more than 16 years of experience in the mortgage industry, I’ve seen all kinds of financial situations. My expertise is in conventional, jumbo, and new construction loans, but I can also guide you if you have a history of collections. My aim is to ensure that you experience a smooth mortgage transaction that closes on time.

Get In Touch For Personalized Guidance

Don’t let past financial missteps keep you from your dream home. Contact me at (918) 855-0494 or [email protected] to explore your mortgage options in Tulsa, OK.