Q: We own an old house that needs 100k worth of work. Should we get a construction loan or a mortgage loan?
My husband has a paid IRS lien on his credit report. I have great credit. Should I get a loan in my name only? Should I title the house in my name only?
A: To fix up an existing property, you will likely need to get a mortgage on it, or to refinance the home if there is already a mortgage on it.
Most banks issues construction loans primarily to build new structures and to finance that construction cost over a set length of time.
Since you said you have great credit and your husband has bad credit, including the IRS lien, it would be wise for you to seek a mortgage in your name exclusively. Otherwise, you may get turned down for a mortgage, or you may have to pay a much higher interest rate than you could obtain on your own.
Regarding your husband’s IRS lien, I assume a couple of things about it.
First, that the two of you don’t file joint taxes, and therefore that lien is only against him — not you. I also assume that the lien is not against the home in question that you want to improve.
If so, that you’ll have to satisfy that IRS lien before any bank will give you a $100,000 mortgage to fix up the home and rehabilitate it.
Given the economic circumstances, I would also title the house in your name alone for the time being.
Once your husband cleans up his credit, you can later add him onto the mortgage and the deed/title. If you do, you’ll both be economically responsible for the home and both will technically/legally be owners of the property.