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Hi all, I'm hoping to get some advice on how to go about getting a loan. I currently own a manufactured home that's worth around $50k. I also (see title) have an IRS tax lien. My plan to put my home on the market end of summer and use some of the money from the sale to completely pay off the IRS and have the lien removed. Can I secure a loan for another home prior to paying off the debt and having the lien released?
P.S. I will have around $25k as a down on the next home and income is just over 50k.
Hi all, I'm hoping to get some advice on how to go about getting a loan. I currently own a manufactured home that's worth around $50k. I also (see title) have an IRS tax lien. My plan to put my home on the market end of summer and use some of the money from the sale to completely pay off the IRS and have the lien removed. Can I secure a loan for another home prior to paying off the debt and having the lien released?
P.S. I will have around $25k as a down on the next home and income is just over 50k.
Well that's encouraging... No way to get pre-approval contingent on payment of the debt? I wouldn't even start the actual home buying process until the debt was paid in full.
This is not related to the ability to get a loan, but to the ability to sell the existing property. When I worked as an agent one of my selling clients had a small amount of unpaid state tax that could be a lien on the property. It was related to her business and had been overlooked. The title company would not issue title insurance until there was proof that the unpaid tax was paid.
I'm not sure how it works with a manufactured home. I know part of the answer will depend on if the home is on a rented lot or property you own. It will also depend on how your state classifies manufactured homes and the transfer of them. It varies from state to state.
You may want to investigate if you can even sell the home prior to paying off the lien.
Well that's encouraging... No way to get pre-approval contingent on payment of the debt? I wouldn't even start the actual home buying process until the debt was paid in full.
No. I will try to break this down as easily as possible.
When you take a mortgage out, the lender will not approve you if they do not have first lien position. First lien position basically means if you default, they get to foreclose and recoup as much money as possible. They get "first dibs" and anyone else who is owed money will get what is left, if anything is left. Judgments and tax liens can jeopardize that lien position. The judgments and tax liens would bump the mortgage company and get satisfied first. The mortgage company will get what is left over. Mortgage companies are not going to be willing to take that risk. This is why mortgage companies try to get everyone to escrow. If you default on your property taxes, that takes priority over the mortgage company and the municipality would get their lien satisfied first in foreclosure. The mortgage company would prefer collecting and paying your taxes for you to avoid such a scenario.
Before issuing title insurance, the title company not only looks at the property for liens, but for judgments and liens against the borrower. They will not issue title insurance unless all liens and judgments are satisfied or the mortgage company waives their lien position. The mortgage company will not close without a lender's policy and they aren't likely to forfeit their lien position. If you have a common name like John Smith, you can always expect that judgments will come up and you will have to sign a Non-Identity Affidavit stating the judgments do not belong to you.
No. I will try to break this down as easily as possible.
When you take a mortgage out, the lender will not approve you if they do not have first lien position. Meaning if you default, they get to foreclose and recoup as much money as possible. Judgments and tax liens can jeopardize that lien position. The judgments and tax liens would bump the mortgage company and get satisfied first. The mortgage company will get what is left over. Mortgage companies are not going to be willing to take that risk. This is why mortgage companies try to get everyone to escrow. If you default on your property taxes, that takes priority over the mortgage company and the municipality would get their lien satisfied first in foreclosure. The mortgage company would prefer collecting and paying your taxes for you to avoid such a scenario.
Before issuing title insurance, the title company not only looks at the property for liens, but for judgments and liens against the borrower. They will not issue title insurance unless all liens and judgments are satisfied or the mortgage company waives their lien position. The mortgage company will not close without a lender's policy and they aren't likely to forfeit their lien position. If you have a common name like John Smith, you can always expect that judgments will come up and you will have to sign a Non-Identity Affidavit stating the judgments do not belong to you.
Thank you. You gave a much better answer than I did.
I'll add that most people don't understand why many mortgage companies charge a higher interest rate when you do not want to escrow. Most consumers figure that they should be getting some kind of discount since the mortgage company doesn't have to mess with paying the taxes, etc. But, as jaynarie explained, the risk is higher to the mortgage company when they aren't paying the taxes themselves. AND they get to use the escrow money for investment purposes (I assume a sweep account for overnight investments, but don't know for sure).
Hi all, I'm hoping to get some advice on how to go about getting a loan. I currently own a manufactured home that's worth around $50k. I also (see title) have an IRS tax lien. My plan to put my home on the market end of summer and use some of the money from the sale to completely pay off the IRS and have the lien removed. Can I secure a loan for another home prior to paying off the debt and having the lien released?
P.S. I will have around $25k as a down on the next home and income is just over 50k.
Hi FullArmor,
The answer is, it depends. Do you have a repayment agreement in place with IRS & have you been making the payments on time?
If the answer is yes, then it may be possible to get approved for a new mortgage prior to selling your current home & paying of the tax lien as long as your income can support it.
If the answer is no then you'll have to have the lien paid off prior to closing on the new mortgage but you can get pre-approved with that as a contingency.
The answer is, it depends. Do you have a repayment agreement in place with IRS & have you been making the payments on time?
If the answer is yes, then it may be possible to get approved for a new mortgage prior to selling your current home & paying of the tax lien as long as your income can support it.
If the answer is no then you'll have to have the lien paid off prior to closing on the new mortgage but you can get pre-approved with that as a contingency.
I don't have a repayment agreement at the moment, but have made around 4k in individual payments so far. I'm open to living in an apartment for a few months after selling if I have to, but would prefer to make the next purchase within 30 days of selling my current home. If a repayment agreement would make pre-approval possible I'm all for that. Thank you for the response!
The answer is, it depends. Do you have a repayment agreement in place with IRS & have you been making the payments on time?
If the answer is yes, then it may be possible to get approved for a new mortgage prior to selling your current home & paying of the tax lien as long as your income can support it.
If the answer is no then you'll have to have the lien paid off prior to closing on the new mortgage but you can get pre-approved with that as a contingency.
The repayment agreement has to be in place for 12 months, and you must show 12 months of on time payments. I believe this only works with an FHA loan. Conventional loan is still a no way.
As far as paying it off as a contingency, I've never seen that. Maybe one of our members who are current mortgage brokers can give their opinion on this idea.
The repayment agreement has to be in place for 12 months, and you must show 12 months of on time payments. I believe this only works with an FHA loan. Conventional loan is still a no way.
As far as paying it off as a contingency, I've never seen that. Maybe one of our members who are current mortgage brokers can give their opinion on this idea.
I'm a mortgage banker.
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