An Arizona parent who owes back pay on child support but needs a loan to purchase a home may feel backed into a tough situation. It's important to understand that owing child support is considered a derogatory credit event. This can impair one's chances of obtaining an approval for a mortgage.
When seeking to obtain a loan to purchase a home, it is important that an individual obtain a copy of their credit report to be aware of the information that is being disclosed. They should also see how high their FICO score is and if it is enough to meet the requirements set by mortgage lenders. To determine if mortgage payments will be feasible on top of child support, the homeowner can use an affordability calculator.
In July 2017, the three main credit reporting agencies modified the way civil and tax liens are reported. The change in reporting also applies to any judgments that are related to delinquent child support. As a result, a parent who has a child support arrearage may not see the record on their credit report, or it may not impair their credit score.
Someone whose credit score is sufficiently high enough to qualify for a conventional mortgage loan may not be automatically disqualified if they are making payments on their overdue child support. When completing a mortgage application, the applicant will have to report their current child support obligation in addition to the extra payment for the overdue child support.
To help prevent such issues, a family law attorney could help a client obtain fair child support settlement terms. If the terms have already been settled, the lawyer could potentially seek a modification that will be better for the client.