Can I get approved while having a Tax Lein if the LTV is great enough to cover the lein?

I have found a bank approved short sale near by listed for $37,000. The estimated home value is $78,000. I have two tax liens, one federal and one state, totaling $20,000. Would it be possible to get a mortgage for the $37k plus an additional $20k to pay off the tax liens. Even at $57k the LTV would be 73%. My credit score is around 650 and I would want an FHA loan. I've done some research and found that the IRS doesn't demand first lien position on mortgages, yet finding a lender who will give you a loan is difficult. It seems that if the LTV stays low enough, even borrowing additional money to pay the liens, that there shouldn't be a problem. 

 Anyone have experience doing this type of thing? 
 Any Lenders in Tulsa, OK willing to work something out?
  • May 27 - Broken Arrow
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Answers (2)

Louis,
You might want to read the question again. The answer is no as there is no cash back permitted on a purchase. A tax lien would need to be paid off with your funds or a payment agreement with IRS and payments made for at least 3-6 months. The maximum FHA loan would be 96.5% of $37,000 ($35,705), and you could request seller/bank pay some or all of your closing cost at that price or an increased price to cover the closing cost.
  • June 11
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In general yes, but you must pay it out of proceeds of the loan and that means your loan will be a cash out loan.  If it was not to start with it will likely change the construct of the loan, the rate and fees which may create other issues.  Cash out loans will be limited to 85% of the appraised value.

Make sure to let your loan officer know this up front and he/she will be able to quote you correctly to avoid frustration during the process.
  • June 11
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