If you’re buying a home, condo, or other property, you may need to get financing. Even if you can afford the home outright or with cash from another source, lenders will want to see proof of your ability to repay a mortgage before extending credit. If you’ve had financial difficulties in the past — for example, you’ve filed for bankruptcy or been hounded by debt collection agencies — lenders will likely check to see if there are any liens against you. A lien is basically a legal claim that someone has on your property. If there are such liens against you, the lender needs to know about them before extending credit. Lenders aren’t necessarily going to reject your loan application because of a lien; they’re simply going to require additional documentation and approval from their underwriting department before finalizing the deal.
How Can I Find Out If I Have Liens Against Me?
Have a mechanic run a VIN check
If you are buying a used car, the best way to find out if there are any liens against it is to run a VIN check. A VIN check is a vehicle identification number search that will tell you if there are any liens against the car. You can have a mechanic run this search for you, or you can purchase a VIN check report yourself. A mechanic can run the report for you, and you can ask them to write down the report number for you. This way, you can run the same report yourself to make sure the report matches up with the number on the car you are buying. If the numbers don’t match, that could mean the car has been in an accident and reported stolen. It is also a good idea to run a VIN report yourself, especially if you are buying a used car from a private seller. A private seller may not have the car checked out by a mechanic before selling it, so you will want to be sure there are no liens against the car. Once you have the report, you can check the following information:
Get your own vehicle history report
If a mechanic is not available to run a VIN report or you cannot afford to buy a report online, you can run a vehicle history report yourself. This report will tell you if any liens have been registered against the car. A vehicle history report will also tell you if the odometer reading on the car has ever been altered. If you are buying a car from a dealership, the salesperson may be willing to run a vehicle history report for you free of charge. However, if you are buying a car from a private seller, you may want to pay for the report yourself just to be safe. If you already have a vehicle history report, you can double-check the following information: The VIN number on the report is correct. The make and model of the car are correct. The report does not indicate the car has been in an accident. The VIN number on the report matches the VIN number on the car (if you are buying a used car).
Run a title search yourself
If there is a lien against the car, it will be recorded on the car’s title. You can run a title search yourself or have a mechanic run one for you. You can run a title search using the same information listed in the VIN report. When you run a title search, it will list all liens against the car. If there is a lien on the car, there will be a notation on the title along with the name of the lien holder. If there is no lien against the car, but you see “clean” or “clear” written on the title, there should be no surprises when you purchase the car. If you are buying a used car from a private seller, make sure the seller gives you a clean title. If you see “salvaged” written on the title, there was a lien against the car and the car was wrecked before you bought it.
Check the car’s incentive to sell
This one is more of a general rule than a specific method, but you may want to check how much the car currently has on it and how long it has been on the market. If the car has a lot of miles on it and has been on the market for a while, it could be due to several reasons, including the car being in need of repair or having a lien against it. If you can find out the details of why the car has been on the market for so long and why it has been unable to sell, you may want to walk away from the deal. It is not worth the risk of buying a car with a lien against it. If you are buying a used car from a private seller, you can try to ask them why it has been on the market for so long.
Check with the current owner and the dealership
If a car has a lien against it, the owner may not be aware of that fact. If you are buying a used car from a private seller, you can ask them if they are aware of any liens against their car. If you are buying a used car from a dealership, you can also ask them if the car has any liens against it. Sometimes, a party that has a lien against the car will call or visit the dealership while the car is still on the lot. They may ask the dealership to pay off the lien or pay them money to settle the lien.
How Does A Lien Impact Buying A Home?
- If you have a lien against you, it will show up on your credit report, making it more difficult and costly to obtain a mortgage loan.
- If the lien shows up on the report and you’re applying for a mortgage at the same time, it’s likely lenders will require a larger down payment and/or a higher interest rate.
- Lenders may also request that you obtain a release of the lien before approving your mortgage.
- This is a requirement in many cases because the lender doesn’t want to take a risk of the lienholder coming after the house you’re hoping to buy.
Why Is There A Lien Against You?
There are many reasons a lien may be placed against you. The most common include:
- back taxes – if you owe back taxes, the IRS can place a lien against you.
- child support or alimony – if you don’t pay child support or alimony, the person you owe can place a lien against you.
- contractor or vendor – if you don’t pay a contractor or other vendor, they can place a lien against you.
- contractor or vendor – if you don’t pay a contractor or other vendor, they can place a lien against you.
How Do You Know If There Is A Lien On Your Property?
- If you’re buying a property and there is a lien against the seller, the lender will place a “lien claim” against the property.
- Once the lien has been properly recorded in the public records, it will show up in your title search and on your title report.
- Lenders will typically wait until the closing to record the lien claim. This is to make sure the seller has the money to pay off the loan.
How Can I Remove The Lien?
- In some cases, you may be able to have the lien removed before closing. This will require you to pay off the debt and then obtain a “lien release” from the creditor.
- If you can’t get the lien released, you may have to have the money available to pay off the lien at the time of closing.
Conclusion
Finally, it’s important to remember that even if there is a lien against you, it doesn’t necessarily mean you won’t be able to buy a home. It just means that you will likely have to wait longer to close and/or put more money down. Please note that we’ve only covered liens related to real estate. There are many other reasons why a lien may be placed against you. If you’re buying a home, condo, or other property, you may need to get financing. Even if you can afford the home outright or with cash from another source, lenders will want to see proof of your ability to repay a mortgage before extending credit.
