Qualifying for Home Loan with Judgment
Most mortgage broker do not want to lend a home loan to borrower who has an unsatisfied judgement. They normally require the judgment be paid off before they will approve a mortgage application with a prior unsatisfied judgment. The reason being is because the unsatisfied judgment can transfer into the home the home buyer is buying. Any assets owned by the unsatisfied judgment debtor can be liened by the unsatisfied judgment creditor. However, there are a few mortgages brokers who will take an unsatisfied judgement as a consideration and extend a home mortgage approval under certain conditions.
Written Payment Agreement with Judgment Creditor
The only way the mortgage broker will give you a mortgage approval with a judgment is if you have made payment arrangements with the unsatisfied judgment creditor. For example, say you have a $20,000 unsatisfied judgement by ABC Corporation. You would need to contact ABC Corporation and make payment arrangements. If they accept $200.00 a month until the debt is paid off, you must sign an agreement with them and make sure you make those payments timely. The mortgage broker wants to see a minimum of 3 to 6 months of timely payments. Sometimes, a mortgage lender might want to see one year’s worth of timely payments. If you did make payment arrangements and are paying monthly, make sure you pay it by check. The mortgage lender might want to see cancelled checks as proof of payment. Make sure you pay them with a check because the mortgage broker might want to see proof of payment and may want to see cancelled checks.
The only way you can get rid of a judgment is by filing bankruptcy, paying the unsatisfied judgment, settling with the judgment creditor, or by statute of limitations. Statute of limitations vary from state to state but most states’s statute of limitations is 10 years. The judgment creditor has the option in most states to renew the statute of limitations for an additional ten years. A personal bankruptcy will wipe out all judgments. Bankruptcies are a unsatisfied judgment creditors worst nightmare.