A few days ago I posted about a friend who is getting a condo but her mortgage bank wants her to pay off an old hospital bill. Well she got approved for her mortgage BUT her mortgage company has stipulated that she *will* pay off the hospital bill and 3 credit card accounts. She got approved for the $110,000 for the condo. She put $30,000 down (gift from parents and trust money) so there's no PMI. The mortgage company, however, is adding in a "cash out" amount of $4,000 which she gets at settlement. Well, actually, what she said they are going to do is make out checks payable to her old, unpaid debts (including that hospital bill) and they will give her the checks to mail when she goes to settlement next week. She said it's a 2/28 ARM "credit rebuilding mortgage" (her words) at 6.74% fixed for the first 2 years then adjusts. But after 23 months, she said they will automatically call her so she can refinance for a better rate. The first 2 years are supposed to help her rebuild her credit, hence the reason they want the old stuff paid off--they tell her it's to get it off her reports because they only look at the past 2 years of credit history for refinancing.
okay, that makes sense I guess. She mentioned that they are gong to list each of the checks on her settlement paperwork. I thought that waw kind of odd. But she's going ahead with the deal.
