Foreclosure in Baltimore>Question Details

Julio, Renter in Baltimore, MD

Can I purchase a home with a federal tax lien on my credit report?l

Asked by Julio, Baltimore, MD Tue Feb 1, 2011

Help the community by answering this question:


You need to talk to a mortgage advisor for specific answers to your question.
0 votes Thank Flag Link Fri Jul 4, 2014
You spoke of the word lien instead of judgement. A lien usually suggests that it is attached to personal property or real estate. I would first find out the appeal process and if you are still in that three year window for appeals. If you are, I would strongly try to have it eliminated or reduced. Just because an IRS agent states that you owe a certain amount, many times that figure can be challenged especially with compensating factors such as current income, a prepayment plan etc. Was an inordinate amount of the amount due applied because of late fees and penalty fees? Are you willing or able to purchase a property with VA financing which is no money down and keep the payment very close to your rent payment? I am a realtor married to a loan originator and about to tackle this problem for someone who is on disability, borrowed from a pension and got hit with a penalty tax. In 2010, they were levied for 40K after failing to file for one year. They didn't have 4K to hire someone to help them and are now repaying the debt on a monthly basis. (four and a half years). The wife makes $26k and he brings home $1,500 a month. Every situation is different but everyone doesn't have the knowledge or awareness to make a case for themselves. I will keep you posted.
V. King New Haven, Ct
0 votes Thank Flag Link Thu Jul 3, 2014
Great Question Julio.

YES. However, there are a few big caveats to this answer. You will have to otherwise be relatively healthy as far as credit, income, assets, debt and employment. In addition, you MUST have a payment plan established and always helpful if you can show you have been paying it for at least 6 months. This is a non negotiable. So make sure you have the payment plan letter from the IRS.

Best of luck! ;)

Web Reference:
0 votes Thank Flag Link Mon Feb 28, 2011
These other folks are correct! Find a lender that you trust and sit down with that person and they will go over everything you need to do. If you are looking for a lender, do some research online, talk to your bank, or talk to a Realtor you trust that can give you some lenders to choose from. Good luck!
Jillian Lennox
StyleHouse Realty
Baltimore, MD
0 votes Thank Flag Link Fri Feb 4, 2011
I ran into this situation a few months ago. Just about every lender will want to see that the lien has been paid off completely. If you have been on a pay plan at least 6 months I have seen some lenders make an exception with enough compensating factors.

I am of the opinion, as many others are as well, that a borrower should take care of their tax obligation with the IRS before they ask a lender to evaluate them as a good risk.
0 votes Thank Flag Link Tue Feb 1, 2011
As a mortgage broker why would you care what the borrower owes and to whom? If they qualify for a loan is all you should be concerned with and ensuring they receive the best rate possible. You should reserve your personal judgements!! So you and all of those other "people" that are of the same mind that these individuals should first pay the IRS first before providing a home for their families should maybe go apply for a job at the IRS directly!!
Flag Fri Nov 30, 2012
Julio: You need the advice of a mortgage lender who can assist you and analyze your entire credit report to see where you stand financially. Your income, expenses and past debt including the tax lien must be taken into consideration and a lender can advise you whether you have to pay the tax lien or not. A tax professional will also be able to help you "Settle", your tax lien perhaps for a percentage of the lien. Every borrower's situation is unique and every borrower's credit history must be analyzed on a case by case basis!
0 votes Thank Flag Link Tue Feb 1, 2011
Julio, in cash it is not an issue.
If you are financing, a lender would have to make that call.
Web Reference:
0 votes Thank Flag Link Tue Feb 1, 2011
Without much information--was the tax lien paid...if not consider paying off any taxes owed before considering a purchase....
0 votes Thank Flag Link Tue Feb 1, 2011
Great question, talk with a local lender. Most of the time, it is free to do, and they can answer all your questions right over the phone. If you do not qualify now, a good lender will help you work on your credit, debt to income ratios and etc, so that you may be able to in the future.
They can provide to you a GFE (good faith estimate) and a loan calculator, so you can figure out how much a house costing X will cost you every month, before you even start looking. That is my advice to all home buyers, get pre-approved before you even begin to look. Best of luck to you.
Spirit Messingham
Tierra Antigua Realty
Tucson, AZ
0 votes Thank Flag Link Tue Feb 1, 2011
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