Bad Credit: IRS Liens and Home Loan Prospects
By Ilyce R. Glink
Q: My husband and I entered into a lease purchase agreement to buy a house. Now, we're being told that we could have qualified for a mortgage, but prior to entering into the LP agreement, all of the lenders were asking for so much money down.
In addition, our credit wasn't perfect. We had some slow pays.
Well, now we're working with a lender to try and purchase the house we are leasing. We haven't had any slow pays in over a year or two. Some of the negative items are gone from our credit report; however, we've been hit with a lien from the IRS.
This puts us back into the same position of not being able to buy the house. We sent an Offer In Compromise letter and we're waiting for a response. However, my question is.....With this lien, will we still qualify for a mortgage and are there any lenders out there that will give us a loan?
A: I've checked with a couple of lenders. Most lenders will run from a lien check from the IRS. Lenders will require the lien to be paid off prior to lending you money.
That's because the IRS has first dibs (even before your mortgage lender) to any proceeds available when you sell your home.
While cleaning up your credit includes paying on time all of your debts and paying down your debts, cleaning up your record with the IRS is most important.
NOTE: This column is distributed by Real Estate Matters Syndicate, PO Box 366, Glencoe, Illinois, 60022. This column may not be resold, reprinted, resyndicated or redistributed without written permission from the publisher.
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