fHA approval? We have an IRS installment agreement NOT a lien. Will this be a problem?

[Anonymous]

Hi there,

After waiting for 6 months the bank finally accepted our short sale offer on a house!  Now we are in the approval/underwriting process and they are pulling transcripts.  I wasn't prepared for this and am a little nervous as we have an installment agreement for 2008 and 2010 taxes.  We've never missed a payment and it is NOT a lien.  The LO requested just 2009 and 2010 tax transcripts but the installment agreement we have goes to the oldest debt first so it shows we are still paying for 2008 even though 2010 is included in this plan.  Should this be a problem for underwriting?  The monthly payment is pretty small and should not effect our DTI by much so we should be fine there.  I can't believe this is just coming up.

Thanks!

[GregB]

I believe you will have to pay ALL outstanding taxes in full and then wait for the IRS to update in 1-6 weeks.

ETA: Did you talk with your Real Estate Agent and Loan Officer about this in the beginning? If so, what did they say?

[Anonymous]

No she never asked...we just went over credit, DTI and asked if we had any liens, judgements, bankruptcies etc.  Which we don't.  We just chose to set up installment agreements rather than pay in full to make it a little easier.  The IRS says they have no delinquent or negative information on us to report.

[Anonymous]

i just closed on a house  oweing over 10k in back taxes and begin on a repayment plan with the IRS for the last 2 years. i did have to write a letter explaining why i couldnt pay and how the payments work

[Anonymous]

thanks rounders0212. Was it an FHA loan? Did you have to provide agreement letter and statements? Thanks again

[203bravo]

I'm sure Shane or Dallas will give you an exact answer when they log on --- my understanding is that as long as it's been on a repayment plan and you've been making the payments as expected then the outstanding amount owed and the payment amount will be considered debt and factored in that way, not necessary to pay it off completely. 

Don't know if there will be any other complications because you are currently paying on a tax year that they are not ordering the transcripts and show no payments for the tax year that they are ordering the transcript.  But explanations will definitely be required for this.

[Booner72]

I have also read that it's okay, but you have to have been paying on time for at least 12 months.

The big question - did you disclose this to your LO already?  Or will it be a surprise?

Good Luck!

[bcdudley]

I have an installment agreement that I have been paying on for 3 months now. I did mention it to my LO and they just brushed it off. They asked if I was current and I said yes. That was the last I heard about it. I just got back my final approval from UW today so it wasn't a big deal for me and the broker I am using at all.

I would definitely tell them about it sooner rather than later, but depending on the lender, it may not be an issue at all.

[Anonymous]

My LO didn't know preapproval, I told her when she said they were ordering tax transcripts...wasn't trying to hide aything, it just never came up. She doesn't seem to know what will be needed, I am not sure she has dealt with it before. Are irs installments not common? I guess I will find out when she sends everything over toi _1 tomorrow! Bcbradley was your loan fha or concentional?

[Anonymous]

yes my installment agreement was coming out of my pay check and it had to have been coming out for 1 year of on time payments. i had to provide them with the installment agreement and i had to call the IRS and have them fax me a account summary for my back taxes.