Don't Get Liened On if you Are Saving For a Mortgage

Pay taxes to get good mortgage

Pay taxes to get good mortgageIf you are saving for a mortgage for Chicago real estate, it’s important that you pay your taxes. While taxes are generally something you consider more heavily after you become a homeowner and have to deal with property tax, not paying taxes can be disastrous for your credit score and chance at a mortgage. Equifax explains in the new article, ”
Tax Questions: Can Unpaid Taxes Affect My Credit Score?” that will make paying your debts to Uncle Sam on April 15 a must do if you want to own a home.
The problem is that if you haven’t paid your taxes, the Internal Revenue Service places a tax lien on your credit report. This acts as a red flag for lenders and can penalize your credit score. Worse, the liens are automatic and even if the service says it won’t place one, there’s a chance that their system may do so for them.
This means you may want to consider non-traditional option to avoid the shadow of a chance of a lien, such as making a partial payment, taking a loan out to pay off the IRS, or other option. Whatever you do, don’t draw the money from your retirement plans, especially if you are under age 59½. That’s the most expensive money you can use. It will cost you at least 30 percent in IRS and state taxes, plus at least 10 percent in early withdrawal penalties.
There are more options available for you after you suffer the lien, and the full article talks more about ways to deal with it if you do. Check it out as well as lots more personal finance advice on the Equifax Finance Blog.