If You Have Delinquent Child Support Payments Or A Child Support Lien, Odds Are, You Can Still Buy A Home
Or Refinance Your Existing Residence.
SLG understands that Life Happens–to us all. Sometimes home
loan applicants experience significant credit events. We believe
you should still obtain financing with attractive rates and terms.
It’s important to note that even in the presence of child support liens, judgments and arrearages you can still obtain a home loan. However, there are a few things you should know:
- Child support issues can sometimes take significant time to resolve. We’re often waiting for governmental entities to research, prepare and forward demands. The wait period can be exacerbated if there is a discrepancy between the borrower and the agency involved.
- If you have child support liens, arrearages, or credit report entries, contact us before shopping for a home.
Child support liens or arrearages often relate to prior marriages or relationships. The purchasing of a new home is often associated with a current marriage or relationship, hence a transaction that goes off the rails because of a child support matter often means more than just a loan denial, it has the potential to affect one’s current relationship. - When applying for a mortgage your child support obligations must be disclosed on your loan application and will be included in your debt-to-income ratio. This applies to Government and Conventional loans.
- As stated in # 2 above, sometimes child support arrearages appear on your credit report. Understand that this is a derogatory credit event. Depending on investor guidelines and the underwriter, this may have to be fully paid.
- If you have a child support lien or a child support judgment (as opposed to just child support arrearages) it may not show up on your credit report. That’s because as of July 2017, Equifax, TransUnion and Experian changed the way civil liens and judgments are reported.
However, this is not a safe harbor and I wouldn’t take much solace. Even though it won’t show on the credit report it’s quite likely to appear when your title company attempts to clear your Statement of Identity (aka Statement of Information). This is significant because your lender will require title insurance and an unpaid judgment clouds the title.
- If you apply for a Conventional Loan odds are you won’t have a problem, as long as your credit score and down payment is acceptable, and your debt-to-income ratio is within guidelines once the child support payment is included.
- When applying for a Government Loan it’s a bit more complicated. If your state has had any reason to deal with your child support issues there’s a possibility that you’ve been reported to CAIVRS (Credit Alert Verification Reporting System). It’s a database that houses the names of anyone who has a delinquent federal debt or an outstanding child support obligation.
If you owe back child support that qualifies for “Federal administrative offset” you cannot obtain a government backed mortgage (FHA, VA or USDA). Under certain circumstances it is possible to be removed from the CAIVRS system without fully paying the outstanding debt. This typically involves obtaining a court supervised written agreement and payment plan with the other parent.
To find out more about child support liens and arrearages, please contact us today.
Call 855.SLG.FUND (855.754.3863) or inquire below.
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