A tax lien on the home of your dreams doesn’t have to be a headache.
You’ve finally found your perfect home. The only problem is that it has a tax lien. Your friends and family may have told you to consider the lien a red flag and move on. However, you’re not sure. More often than not, a tax lien on a property doesn’t need to get in the way of your perfect home purchase. It’s simply a matter of doing your homework on the reason behind the lien, the amount it’s for, and whether the agreed-upon sale price will take care of the seller’s debt.
Property taxes are collected by state and local governments to fund public services and institutions, most often associated with public education, first responder services, and operational costs of local museums and parks. A lien is placed on a property when the homeowner fails to pay annual property taxes to the state or government. The lien is the amount owed and must be paid in order for the sale of the property to go through. Other forms of tax debt can also lead to a tax lien on the property.
If there’s a lot of money owed on the lien, you could be setting yourself up for a significant financial loss. Mortgage lenders take a more cautious approach. If you’re obtaining financing to purchase the property then you will probably not be able to purchase a house with a tax lien on it, unless it will be paid in full and removed at close of escrow.
If you need a loan to purchase the house, then you will most likely not be able to purchase as long as the tax lien is attached to the property. Most mortgage lenders require a first lien position on the property, and a tax lien will have first lien priority over the new mortgage loan because it is pre-existing. Therefore, your mortgage lender will require somebody to pay the taxes and have the tax lien removed before they will give you a mortgage loan on the property.
The real estate industry can be a minefield, so it pays to have someone trustworthy by your side. Serving all of California and Texas, contact Andraya Coulter to get access to the top home loans. I can help you secure the loan that will land you the house of your dreams!