Tax Lien

A tax lien is a debt against your property for failing to pay certain taxes. If you have a tax lien, it will need to be paid either prior to your refinance, or from the proceeds of your refinance.

Tax liens from the IRS are very common liens placed against a person's property. Usually these are a result of unpaid money owed to the IRS from doing your taxes. These IRS tax liens are required to be paid in full before or when you refinance or sell your home. The liens can be a result of a federal or state lien.

If the tax lien against a property is a Property Tax Lien, it will be required to be paid off prior to securing a new loan against the property. If the tax lien is a non property tax lien, it may be required to be paid off, but in some cases it may not be necessary.

You may pay off outstanding tax liens with proceeds from a mortgage refinance. After a tax lien is paid off your credit score should increase.

There are couple lenders who still allow you to receive mortgage even with the IRS tax lien against you. However, for long run, the tax lien should be paid off because it will hinder you every time you try to obtain some type of loan from a bank.

If you are refinancing and have a tax lien then your settlement agent will usually take the money directly from the loan proceeds. If you are in doubt regarding a tax lien find out prior to settlement if it must be paid; most times you won't have a choice.

Tax liens can sometimes be sobordianted or settled for less than face value. You are allowed to purchase a property with liens against you, but the liens will attach to your proerty once you complete your purchase.

When you fail to pay your taxes the government will place a tax lien against your property. Federal tax liens have priority over other liens based on the date the federal tax lien is recorded.

» DISCLAIMER: The information contained in this article on 'Tax Lien' is a collection of contributions by licensed mortgage professionals and is not the opinion of Broker Outpost LLC. Always consult a licensed professional before applying for a mortgage.