When I was hired at my current position 18yrs ago, they did not distribute pay stubs. So, it was an entire year before I discovered they also did not pay state taxes.
Having both current and previous taxes taken from my check each week became difficult and I have paid less on them each month. This created a back tax problem.
While I am still paying the taxes, they have a lien on my credit. I continue to work on my report so that I am getting the highest rating and FICA score.
Still, I would like to purchase a home and wondered how this would affect my ability to do so. I am looking at purchasing a single family home in Charleston, SC.
Can you provide me information about how these types of situations are handled in the First Time Home Buyers Market in Charleston?
Thank you,
Linda
=====ANSWER=====
Hi there Linda,
Thank you for coming by and asking a question here at my website.
I kind of have to read between the lines to be sure I understand what you are saying. So I will tell you what I think and see if this fits for you.
You have back taxes due to your state. If I'm understanding this right, it goes back 18 years ago. You got an entire year behind on state taxes. Then you started paying your current taxes and also started making payments on the back taxes.
Since it has been a hardship on you, the amount must be rather small so you still have this tax lien on your credit file.
Ok, if all of that is indeed the case, and you have been making payments on back taxes for this long (which is kind of hard for me to understand) you should have a payment history here.
Most FHA lenders will be looking for 24 months minimum payment history for back taxes or other collections on your credit file. If they have been paid on time and are not in collection, then it could be used as a credit line with history which should be to your favor. You need to understand more on the FHA Home Loan Requirements.
Also, your credit score would need to be at 620 or above for an FHA home loan these days. HUD has tightened up the underwriting guidelines since the mortgage meltdown.
Understanding how credit scores work is the beginning of the mortgage process. Know your credit scores before you apply for a mortgage. Many free details found on this page.
