Eclectic Homes

Refinancing Your House With an IRS Lien

A lien is a claim of ownership against property. Creditors put liens on property. IRS liens are put to collect low-income taxation. All liens on a property must be paid before the property could be transferred with apparent title, mortgaged or refinanced. To clean an IRS lien before refinancing, you must pay the lien with your own funds, borrow enough to cover it with the proceeds of your new mortgage, or a blend of both.

Contact the IRS and request a Certificate of Subordination, which moves the IRS’ claim behind that of the mortgage company’s, consequently giving the mortgage business the lien position it must refinance your current mortgage without any fear of an IRS foreclosure. The IRS will agree to subordination as long as it is paid from the proceeds you receive at closing. It will agree to some subordination even if there are no proceeds at closing, but refinancing permits you to reduce your mortgage payment and pay the IRS more toward your tax .

Get in touch with a mortgage business to start the refinancing process. Your present mortgage lender will offer you the best deal since it already has your information on file and also wishes to keep you as a customer. Expect to pay a relatively large interest rate since the tax lien has likely reduced your credit score.

Provide any documents or data that the mortgage firm asks. Schedule an appointment to meet with the lender’s exemptions in your home, if required by the lending company.

Attend the final to sign the new mortgage documents. Bring by certified check, made out to the final attorney, any funds–closing costs, fees, taxes –you must provide. The closing attorney will cover all fees, taxes and exemptions due, such as the IRS lien due.

See related