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Old 06-07-2010, 10:22 PM
 
92 posts, read 282,013 times
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How long must one be enrolled in a IRS tax payment plan before getting FHA loan approval? Looking to purchase a foreclosure, which would lower our monthly housing expenses- as we live in a very expensive area and rent is astronomical. Have heard so many different answers to this questions. Have been told need one year of payments, 6 months and just yesterday spoke to a broker who said you just need one month of payments to be made before closing. Is there a set in stone time frame or does it depend???? thanks!
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Old 06-08-2010, 09:44 AM
 
Location: Lending in all 50 states
157 posts, read 461,264 times
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Quote:
Originally Posted by nadia32 View Post
How long must one be enrolled in a IRS tax payment plan before getting FHA loan approval? Looking to purchase a foreclosure, which would lower our monthly housing expenses- as we live in a very expensive area and rent is astronomical. Have heard so many different answers to this questions. Have been told need one year of payments, 6 months and just yesterday spoke to a broker who said you just need one month of payments to be made before closing. Is there a set in stone time frame or does it depend???? thanks!
Hi Nadia32,

It all depends on each individual lender's requirements. Most lenders will require proof that the you've made payments on time for 6-12 months. FHA has set guidelines that every lender must underwrite FHA loans by but lenders will also add on their own requirements. For example: FHA does not have a set minimum credit score requirement but almost every lender out there now requires a 620 mid score.
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Old 06-08-2010, 11:15 AM
 
92 posts, read 282,013 times
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Thank you for the info! So, are there any lenders that would give a mortgage with less than the 6-12 month period? Is there a remote possibility? Is it worth calling lenders or probably near impossible? Are there any lenders that have less stringent requirements for FHA? thanks so much!
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Old 06-12-2010, 09:06 AM
 
92 posts, read 282,013 times
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Hi. Was hoping someone would be able to give me a little more advice. Spoke w a mortgage broker who said tax lien not a problem as long as we are enrolled in payment plan- for one payment. He insists we should start application process. I am a bit weary- but what would be the point of him telling us to start application if he didnt feel confident we would get approved? right? Is there any reason to feel mistrustful? thanks!!!!!
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Old 06-13-2010, 10:56 AM
 
Location: MID ATLANTIC
4,032 posts, read 8,732,468 times
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If this is a tax lien, you may have a longer wait than 12 months. Once you buy a property, the IRS has claim to seize the home as collateral to their proprietary claim. FHA (the most lenient of the bunch) requires the IRS to agree to subordinate their lien to the mortgage.

Does the tax lien show on your credit report as a lien? If so, the bad news: I've been doing this a long time and have yet to see the IRS subordinate a Notice of Federal Tax Lien to a purchase money mortgage. The only successful subordinations I have seen have been for refinances to obtain a lower rate with a strong payment history of more than one year (and even then, we had to get the borrower's State Representative in Congress to help). I'm sure others have seen these agreements, but I would be curious if they have seen them in recent years. (emphasis on what I have seen, we hear of others being successful, but when asked "have you personally seen this" I have yet to see anyone say yes - and then, I would want to know the investor used).

However, if you are on the IRS payment plan, with no legal filing (not on your credit report), you may be able to get away with a 12 month payment history. Be sure you answer this question correctly: Are you presently delinquent or in default on any Federal debt, or any other loan, mortgage, financial obligation, bond, or loan guarantee?

Keep asking around......push to get it in writing once you hear someone say they can do it........get the loan pre-approved with all of your documentation reviewed. Once you have it in writing, you can take it to the bank. And if it's subject to IRS subordination, you know you have your work cut out for you. (IRS publication 785 - http://www.irs.gov/pub/irs-pdf/p785.pdf )

Last edited by SmartMoney; 06-13-2010 at 11:14 AM.. Reason: typo
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Old 06-13-2010, 08:03 PM
 
92 posts, read 282,013 times
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thanks smartmoney. Tax lien is not on credit report yet, but lien has been filed. We should begin payment plan in next few weeks. We are working with tax acct to finalize everything. So confused as to why several brokers would tell me that getting a mortgage is not going to be problematic and monthly amt paid to IRS will simply be figured into our debt to income ratio. We are looking to purchase a home so our housing budget will be decreased- as our rent is quite high. What would be the reasoning a mortgage broker would make false promises on something that cannot happen? isnt is just a waste of their time? thanks again!
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Old 06-13-2010, 08:33 PM
 
Location: MID ATLANTIC
4,032 posts, read 8,732,468 times
Reputation: 3042
I don't think they are making false promises - I think they are unsure of what they can get thru......it's a whole new world out there, and it's never been tougher. Many are over-optimistic and really believe there won't be a problem.

If its not on your credit, you're playing roulette by answering the Federal debt question incorrectly. It may never wind up on your credit as long as you are on time. In the past, I would say, if you have a payment plan, you have a loan arrangement and you are not delinquent. But it's a different world now. You don't want to add being in default of a contract to your troubles if your loan is declined because the transcript shows a huge 2009 tax bill and you are asked how did you pay for it.......oh, it's not paid? See the problem?
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