How to Buy a Home with a Judgment Lien
Judgment Liens and Home Financing
Judgment liens are court orders that require that a debtor turns over his or her home to a creditor for failing to fulfill his or her payment contract. In this week’s blog, the mortgage professionals at Associates Home Loan of Florida, Inc. will provide a short overview of judgment liens and discuss how they affect a borrower’s ability to purchase a home. If you have questions about purchasing a home in Orlando, Tampa, or Sarasota, FL, our professionals are happy to help.
A judgment lien is a court order against a person that requires that he or she reach an agreement with a creditor to pay off debt. A judgment lien can be placed on a property as a security measure for the creditor. It allows a creditor to take control of the property if the owner fails to make agreed-upon payments to the creditor. Once a judgment lien is placed on a home, the home cannot be sold until it is removed. This is sometimes also referred to as a “cloud” on the title. Once the full amount due to a creditor is paid off, the lien is discharged.
Purchasing a Home with a Lien
Once a home goes into foreclosure, any liens on the property are removed. This means that you can purchase a home that previously had a lien and went through foreclosure without any fears. Foreclosure sales are a very popular choice for many of our clients because they can purchase homes well below their true market value.
Obtaining a Mortgage if You Have a Judgment Against You
If you have a debt judgment against you, you will not be able to obtain a mortgage until it is settled. Before you can close on escrow, you will have to settle the lien and show documentation for it. You can obtain a judgment from the court showing this process has been completed, and you will also obtain title insurance, which declares that you do not have any open judgments against you.
Judgments can be released by paying off the debt. Some other clients with severe debt also choose to file for bankruptcy, which results in the removal of any judgment liens on your record. Filing for bankruptcy should only be considered in serious situations in which other financial obligations have become overwhelming. Filing for bankruptcy can also negatively affect your credit score for a period of time, which may actually make it more difficult to obtain a mortgage for a few years.
We Offer Unique Solutions for Homebuyers
We work with clients in Orlando, Tampa, Sarasota, and nearby Florida neighborhoods. If you have questions about purchasing a home that has a judgment lien on it, or if you have a judgment against yourself, we can help. We specialize in helping clients with unique lending challenges. We work with top lenders to offer competitive rates and flexible terms. Contact Associates Home Loan of Florida, Inc., to further discuss purchasing homes with judgment liens.