How Does a Judgment Affect Home Ownership?

If you stop making payments on a credit card or loan, the creditor or lender can take you to court which may result in a judgment against you. A judgment is really just a piece of paper signed by the judge saying you owe a debt. Once this has been obtained by the creditor, they are allowed to use the legal system to try to attach your personal property or garnish your wages in compensation of your debt.

The amount of time a judgment can show up on your record is 10 years, or double that if the judgment remains unpaid and is renewed. The longer it is on there, the more stress it can put on your shoulders. Particularly, mortgage companies are wary of negative credit items on an individual’s report and often do not approve loans for borrowers who have them. Judgments can either be small or large, and if you own a home, it can become a lien against the property. Such companies usually require the judgment to be paid off before a new loan can be given out.

An important thing to keep in mind is that the more time there is between you and a judgment, the better. A recent judgment will reflect more negatively than a much older one. Therefore, if you are in the process of wanting to own a home, it might be in your best interest to wait for a bit. This will also give you time to build up your credit score and polishing your record by paying off any other debts and having mistakes removed.

If you want to be a new homeowner, the first thing you will want to do is pay off the judgment. Mortgage lenders are against closing on a new home with an unpaid judgment, knowing that the judgment holder could possible turn the property into a lien. After the judgment has been paid off, it would be wise to give it a year or two for your credit to recover. After this, make sure you document the payment as well as the release of the judgment. This whole process may take some time, so make sure you stay patient. By providing all the documentation and going through other formalities, you can eventually own a home and start living a healthier (financial) life.

It is important to not only fix your mistakes, but also learn from them so you do not make them again in the future. Although, at first, it may look like a judgment could prevent you from home ownership, that is not completely true. You can still get a mortgage and purchase your own home.

Archana Sabesan

Archana Sabesan

Archana Sabesan is a junior at North Carolina State University. She is currently pursuing a major in Psychology, with a primary focus in Child Psychology, and a minor in Spanish. After graduating, she plans to attend graduate school to obtain her PsyD degree in Clinical Psychology. Her experiences at Stanford University and Duke University as an Undergraduate Research Assistant have helped her to develop an effective research regiment and build on her observation skills. She hopes to open a private practice of her own in the future.

Every summer, Archana works at Kumon, a math and reading workshop, tutoring children between the ages of three and 18 in these subjects. She used to be enrolled in this program herself, so this allows her to connect with the students and give them the one-on-one help that they need. Archana is also currently a member of NC State’s Psychology Club, Rotaract Club, and EKTAA (NC State’s premiere South Asian Student Organization).

Archana was born in India, and moved to North Carolina with her immediate family when she was 7 years old. She speaks mostly Tamil, the native language of South India, and English in her home. In addition, having taken Spanish classes since 6th grade, she can speak and understand it pretty well too. Archana enjoys spending time with her family and friends, watching movies, listening to music, and going to the gym. She also loves to travel, and hopes to travel the world one day and learn about all the different cultures!
Archana Sabesan