Gustan Cho The Mortgage Expert,
Publish On: April 24, 2021
This Article Is About Qualifying For A Home Loan With Tax Lien And Judgment Mortgage Guidelines
Every agency mortgage loan program has its own guidelines when it comes to qualifying for a mortgage. For example, HUD allows borrowers with outstanding tax-liens to qualify for an FHA loan as long as the borrower has a written payment agreement with the Internal Revenue Service. Three months of timely payments need to be made. The borrower needs to show proof of timely payments to the lender. You cannot repay the three months of minimum payments upfront. The same guidelines apply to USDA loans. Fannie Mae and Freddie Mac do not allow borrowers with outstanding tax liens to become eligible to qualify on conventional loans. However, you can have delinquent taxes and be on a written payment agreement and qualify for a conventional loan. The tax debt just cannot be a tax lien. You need to make at least one payment prior to closing to the IRS on conventional loans. VA loans allow tax liens as long as you have a written payment agreement with the IRS. However, the VA requires a one-year timely payment history on your written payment agreement to become eligible for a VA loan. All loan programs allow borrowers to qualify for a mortgage with an outstanding judgment as long as they have a written payment agreement with the judgment creditor and have made three timely payments. In this article, we will discuss and cover qualifying for a home loan with a tax lien and judgments.
Importance Of Timely Payments And Payment History
Mortgage Lenders will not only look at credit scores. Mortgage Underwriters will also carefully examine credit and credit payment history. FHA Loans With Tax Lien And Judgment Mortgage Guidelines allows borrowers to qualify with tax liens and outstanding judgments.
Two of the things mortgage underwriters will look for are judgments and tax liens. Borrowers can qualify for a home loan with a tax lien and judgment. HUD requires borrowers on FHA loans to have written payment agreements and have been making timely payments for the past three months. Lenders will want to see a written payment agreement with the Internal Revenue Service on tax liens and judgment creditors on judgment on FHA loans. The re-payment terms and conditions need to be provided to mortgage underwriters. At least a three-month payment to the Internal Revenue Service and/or judgment creditors needs to have been in effect. Mortgage underwriters will want to see at least three months of canceled checks or bank statements to be provided. There are lenders that will not qualify for a home loan with a tax lien unless the borrower has had at least a 12-month re-payment history with the Internal Revenue Service as part of their overlays. Fannie Mae and Freddie Mac allow borrowers with outstanding tax debts to be eligible to qualify for a conventional loan but the tax debt cannot be a lien. Other lenders may not accept written payment agreements and want borrowers to pay outstanding tax liens and/or judgments in order to qualify.
Qualifying For Home Loan With Judgment
Judgments are the worst derogatory credit item consumers can have.
- Lenders think of judgments worse than bankruptcies and foreclosures
- A judgment is a court ruling favoring the judgment creditor and giving the judgment creditor the right to enforce the judgment
- Judgment creditors can go after the judgment debtor to collect on their judgment by legal channels
- If a judgment creditor finds out that the judgment debtor has income, the judgment creditor can go after the judgment debtor and try to garnish their wages
- The court that issued the judgment has no enforcement powers
- It is not the responsibility of the courts to collect on the monetary judgment for the judgment creditor
The judgment creditor needs to proceed through other legal channels in trying to enforce and collect on the monetary judgment.
Home Loan With Tax Lien: Settlement On Judgment On Home Loan With Tax Lien And Judgment
If consumers do not have a written payment agreement set up with a judgment creditor and need to qualify for a home loan, they either need to have the judgment paid off in full and/or have it settled with the judgment creditor and have that judgment reported as satisfied. Borrowers do not have to pay the whole face value of the monetary judgment. They can settle for a fraction of the monetary judgment face value amount. But need a release of the judgment and the judgment needs to show that it has been satisfied.
How Long Does Judgment Remain On Credit Report
A Judgment will remain on your credit report for a period of 7 years. However, even if the judgment is deleted from a credit report, the judgment will be effective for at least 10 years in most states. The judgment creditor has the option to renew the judgment for another 10 years. Most judgment creditors will not renew a dormant judgment for another 10 years. Judgment creditors do not renew the judgment after the statute of limitations once they know that the judgment is non-collectible due to the fact that it costs money in legal fees and recording costs in renewing the judgment. Judgment creditors will renew the judgment if they get wind that the debtor has money, assets, good income and it may be collectible.
How Long Will Tax Lien Remain On My Credit Report?
A tax lien will remain on your credit report until the tax lien is satisfied and paid off in full. From the date it has been satisfied and paid in full, it will remain on your credit report for a period of 7 years. Judgments will remain on your credit report for a period of 7 years from the date the judgment was recorded on public records.
Home Loan With Tax Lien: Can I Qualify For Mortgage If I Get Judgment And Tax Lien Deleted Off My Credit Report?
Credit repair does work and many consumers have great success in having collections, charge offs, bankruptcies, foreclosures, tax liens, and judgments deleted off their credit report.
- However, mortgage lenders will do a third party search with outstanding judgments, tax liens, bankruptcy, foreclosure, and other public records
Even if borrowers get public records expunged from credit reports, the chances are that judgments, tax liens, foreclosures, and bankruptcies will be revealed when lenders conduct a third-party public records search via Lexis Nexis or other third party searching service.
How To Qualify For Home Loan With Tax Lien
Borrowers who need to qualify for a mortgage with a tax lien with a direct lender with no overlays can contact us at Gustan Cho Associates at 800-900-8569 or text us for a faster response. Or email us at alex@gustancho.com. Gustan Cho Associates are experts in helping borrowers with outstanding tax liens and judgments.
