Your Mortgage Loan And Your Rent History

If you are currently renting and plan to purchase a home in the future you need to understand how your rent payments affect getting approved for a mortgage loan.

First thing, if your credit scores are very high then your rent history may not be an issue at all.

However, if your rent history is needed for approval of your home loan then you will need to provide proof of that rent history and some forms of proof are not acceptable.

If you rent from a rental management company then you will need to provide either a letter from the rental company on their letterhead or the mortgage processor will send the rental management company what is called a 'verification of rent' form to be completed showing your rent history. The lender must be able to find this rental company's phone number listed in the telephone directory. This prevents some friend of the borrower from posing as a rental company.

If you rent from a private individual then you will generally need to provide copies of the last 12 months of checks or money orders showing the rent that you paid. Hand written receipts are not acceptable. The lender considers hand written receipts unacceptable because the borrower could have just anyone write a receipt for them.

The lender is trying to determine if you have been truly paying your rent on time and that you are a good credit risk.

A lot of people pay their rent in cash to a private individual. That is maybe good for the landlord but it doesn't do the renter any good at all because those handwritten receipts are not acceptable for obtaining a mortgage loan. If the landlord doesn't want to accept a personal check, at least pay with a money order and keep a copy of the money order as a receipt.

You generally need at least two years of rent history with no late payments.

If you are not following these guidelines then you may want to change how you are handling your rent now so it won't be an issue when you apply for your first mortgage loan.

If you are in a position that you will need a bad credit mortgage loan then a good, well documented rent history is very important.

As a mortgage loan officer I have interviewed applicants who didn't understand the importance of their rent history. Some applicants had paid cash and had only hand written receipts. Others had paid with a money order but didn't save their money order receipts, so they had no proof that would meet the underwriting guidelines.

So be diligent and attentive to how you handle your rent payments. It will benefit you in the future.

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