If you are refinancing and have a tax lien then your settlement agent will usually take the money directly from the loan proceeds. If you are in doubt regarding a tax lien find out prior to settlement if it must be paid; most times you won't have a choice.

It is important to remember that Tax liens are recording by the State and may often times be an error. If you suspect that you have a tax lien you should notify the taxing authority immediately. Remember, even if you have a legitimate tax lien and you pay if off, it is still up to YOU to have it removed from the county file by showing proof of payment. Then you can have it removed from your credit report.

There are couple lenders who still allow you to receive mortgage even with the IRS tax lien against you. However, for long run, the tax lien should be paid off because it will hinder you every time you try to obtain some type of loan from a bank.

Tax liens from the IRS are very common liens placed against a person's property. Usually these are a result of unpaid money owed to the IRS from doing your taxes. These IRS tax liens are required to be paid in full before or when you refinance or sell your home. The liens can be a result of a federal or state lien.

If the tax lien against a property is a Property Tax Lien, it will be required to be paid off prior to securing a new loan against the property. If the tax lien is a non property tax lien, it may be required to be paid off, but in some cases it may not be necessary.

You may pay off outstanding tax liens with proceeds from a mortgage refinance. After a tax lien is paid off your credit score should increase.