With the resurgence of the housing market, more people are finding it easier to buy new homes. Even so, you may hesitate to submit a mortgage application because you still owe the IRS a tax debt. Discover how unpaid taxes can impact your ability to buy a home and how lenders regard IRS debts when considering new mortgage applications.
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IRS BACK TAXES AND THE MORTGAGE APPLICATION PROCESS
Few people go into a mortgage application process with perfect credit records and no debts to their names. In fact, millions of people each year are approved for mortgages owing money to creditors like student loan financiers, hospitals, auto finance companies, and others.
ARE YOU FACING UNPAID TAXES?
Moreover, many mortgage lenders today have no problem helping people who have serious blemishes on their credit records. They may be able to overlook or work around credit mishaps like:
However, a tax debt is held in a different regard simply because of the leeway the IRS enjoys when collecting on what is owed. When you owe the IRS money, you could be subject to a tax lien or levy at any time particularly if you have made little no to effort to satisfy the debt.
Mortgage lenders realize the risks that come with owing the IRS money and what measures this federal agency can use to recoup outstanding tax balances. They do not want to loan money to someone whose house could be levied.
You might believe that you are doomed to being denied a mortgage for as long as your tax debt remains unsettled. It is true that if you take no action whatsoever to pay it off that you are likely to be denied for a home loan. However, if you take curative actions to settle the account, you could make yourself more appealing as a mortgage applicant and might up your chances of eventually being approved.
Proactive Measures to Handle Tax Debts
Your ideal method of being approved while owing a tax debt is to pay off what you owe the IRS. If the debt no longer exists, the mortgage lender has no reason to hold it over your head as a reason for your denial. Paying off the amount could increase the likelihood of you being approved for a home loan.
If the amount is too great to pay off in full, you should at least make some attempt to pay it off in increments or settle it for a lesser amount. In particular, if you are applying for a VA loan, you could still be approved with an active tax debt if you:
are set up on a suitable monthly installment agreement with the IRS
have made at least 12 consecutive payments on the installment agreement
satisfy the debt-to-income ratio requirements even with the monthly IRS payment
can provide of the outstanding tax debt balance on your mortgage application
Even if you can prove these key details, you may still not qualify for standard underwriting of your mortgage. You may need to seek out manual underwriting, which could put more intense scrutiny on your debts and lower the required debt-to-income ratio.
If you are not approved for a mortgage right now, you should not despair about your chances of being approved in the future. It is important that you take action now to deal with your IRS debt and to pay it off as soon as possible. You can accomplish this by hiring a tax professional if necessary and setting the debt up on an installment agreement or by making an Offer in Compromise to settle the debt for a reasonable lower amount.
You should also check your credit report once a year and report any inaccurate information or discrepancies. Removing inaccurate or outdated information could raise your score and improve your overall credit record.
Mortgage lenders regard tax debts as riskier than other types of debt. Still, an unsettled IRS debt may not sink your chances of being approved for a home loan. You can improve your chances of approval now or in the near future by knowing what proactive steps to take to pay the IRS and handle your tax debt satisfactorily.
Whatever you do, don’t duck the IRS if they should come calling. Enlist a tax pro if you’re unsure of how to respond to an audit notice.
Advance Tax Relief offers an experienced team of tax professionals who specialize in working directly with the IRS to solve difficult tax issues for businesses as well as individuals with back taxes or other tax issues. Contact us today at 800-790-8574 for more information or to schedule a consultation.
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So, if you have IRS Problems, Owe Taxes, have Past Due UnFiled Tax Returns – Take action today! You should work with a local tax relief firm. Call Advance Tax Relief (800) 790-8574
GET TAX RELIEF HELP TODAY
If you think that you may need help filing your 2017 tax return and past due tax returns, you may want to partner with a reputable tax relief company who can help you get the max refund and reduce your chances for an IRS AUDIT.
Advance Tax Relief has a offices in Houston, TX and Los Angeles, CA and helps many individuals just like you work with the IRS to solve a wide variety of issues, including penalty waivers, wage garnishment release, bank levy release, tax audit representation, back tax return preparation and the IRS Fresh Start Initiative. Our Top Tax Attorneys, Accountants and Tax Experts are standing by ready to help you resolve or settle your IRS back taxes.
Call our team today at 800-790-8574 for more information. For a free consultation, schedule an appointment with us online.
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