Remove Tax Lien for possible Mortgage Approval

Many times, new home buyers in Texas or current home owners wishing to refinance in Texas apply for mortgage financing only to discover that they have an IRS Tax Lien reporting on their credit report that has negatively impacted their credit scores to a point that they cannot qualify for a mortgage. Is there a way to remove a tax lien for possible mortgage approval?

In all cases, Fannie Mae and Freddie Mac will require the Federal Tax Lien to be paid off at or prior to funding — and this is assuming that the Federal Tax Lien has not significantly devastated the credit scores of a borrower to qualify for a mortgage in the first place to get Lender Approval. A repayment plan is not acceptable.

For FHA and VA financing (assuming qualifying credit scores), a person is not eligible for a mortgage until:
• The delinquent account is brought current, paid, or otherwise satisfied, or
• A satisfactory repayment plan is established between the borrower and the Federal agency owed, which is verified in writing.

Tax liens (in this case) may remain unpaid provided the lien holder subordinates the tax lien to the Government-insured mortgage. Of course, all this is subject to Underwriting approval and possibly additional Lender “overlay” requirements.

Having a Tax Lien on a credit report can not only ruin one’s credit scores needed to qualify for mortgage financing — but it can devastate one’s dream of home ownership by not being able to qualify for a mortgage to purchase a new home or qualify to refinance a current mortgage.

There is hope! If you are aware of a Tax Lien reporting on your credit report, you are now empowered with knowledge on a way to increase your credit worthiness for possible mortgage approval if you take action as soon as possible. Read on….

The IRS may now issue a withdrawal of a filed Notice of Federal Tax Lien after the lien has been released. If you wish to have the Notice of Federal Tax Lien withdrawn, you must request the withdrawal in writing.

If you are a qualifying taxpayer and meet the eligibility requirements, you may have your tax lien withdrawn after entering into a Direct Debit Installment Agreement (DDIA). If you are currently on a regular installment payment agreement, you may convert to a DDIA. As mentioned, your request for lien withdrawal must be in writing.

It is important to know that a withdrawal of a federal tax lien is a lot more beneficial than a release as a withdrawal expunges the lien immediately from the debtor’s records and it is as if the lien had never been filed.

Upon further review of the IRS eligibility requirements, a huge benefit in relationship to mortgage financing (I believe) is that you can ask for a lien withdrawal with the IRS even if you haven’t fully repaid the debt, as long as the amount that you currently owe to the IRS doesn’t exceed $25,000.00. Wow – this is big! You also must agree to pay off the rest via monthly debits from your bank account. The IRS won’t withdraw the lien until at least three (3) consecutive debits to your bank account has been made.

This may be “key” to possibly qualifying for mortgage financing on a new home purchase for buyers in Texas or a refinance for existing home owners. If the Tax Lien no longer reports on the credit report, the credit scores should increase enough to qualify for mortgage financing sooner than later.

In practicality, this means someone who has an IRS tax lien can improve their creditworthiness to a Mortgage Lender by opting to go into the DDIA and eventually having the IRS withdraw their tax lien. It doesn’t guarantee that someone who couldn’t get mortgage approval in the State of Texas before will now be approved, but it is a huge step in the right direction as it should help improve credit scores for qualification purposes – and the hope of home ownership sooner than later.

If you or anyone you know has a federal tax lien, please share this with them by posting to their social media site below. If you are visiting my blog for the first time, please subscribe. If you are in need of any additional mortgage related information for your new home purchase in Texas or to refinance your home mortgage in Texas, please call our office at (713) 528-0333. You can also visit our website.

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Great news for our U.S. Veterans – Affordable Home Mortgages!

Great News for our Veteran’s Home Loans effective October 1, 2011. The VA Funding Fee is dropping! If you are a Veteran and looking to purchase a home in the Houstonarea and throughout the great State of Texas, now is the time to buy!

Not only does a Veteran qualify for 100% mortgage financing with NO money down, effective October 1, 2011 the VA Funding Fee is dropping! Add to this that current interest rates are extremely favorable makes now the Time to Buy in Texas!

Currently, a first time Use of Entitlement for a Veteran on a purchase is 2.15% and will drop to 1.40%. The Subsequest Use of Entitlement is currently 3.3% and will drop to 2.8%.

If you are a Veteran and you are putting 5% down on a purchase, the first time Use of Entitlement is 1.5% but will be cut in half to 0.75%. The Subsequent Use will also be cut in half from current 1.5% to 0.75%.

If a Veteran is putting 10% down on a purchase, the first time Use of Entitlement along with the Subsequent Use of Entitlement is 1.25% and will drop to 0.50%!

This is great new for our U.S. Veterans. Fairway Mortgage in Houston is a VA approved residential mortgage Lender. We Underwrite and Fund all VA mortgage transactions to include both purchase and refinance residential mortgages.

Fairway Mortgage is also a proud sponsor of the Boot Campaign. We support our U.S. Troops and wounded warriors. The Motto of the Boot Campaign is “When they come back – We give back“! Get YOUR Boots on and please join in supporting our troops. Please visit the “link” to the Boot Campaign above. You will be glad you did!

If you are a Veteran looking to purchase a new home or refinance your existing home in the State of Texas and/or throughout the Houston area, please call the office of Fairway Mortgage at (713) 528-0333.