A high number of those in the market for a mortgage are first-time homebuyers, and those in this group may be new to certain elements of the process. They may also have a limited history in terms of certain major financial areas required for this process, such as credit, income statements and other similar areas.
At VIP Mortgage Inc., we’re here to help all our clients, first-timers and beyond, get the best mortgage rates and find the home of their dreams. For those with a limited credit history that makes it difficult for lenders to assess your ability to repay a loan, or for certain mortgage loan programs like the FHA or VA programs, one document you may be asked for is verification of rent from your prior living space. Let’s go over all the important basics here, including what goes into this form and how you can work things out if you live with a family member or friend.
As the name suggests, verification of rent is an alternative way for a lender to confirm that you’ve been making payments toward your living situation in the recent past, similar to how you will moving forward with a mortgage. While rent payments and mortgage payments aren’t the same, a strong rental payment history shows that you have income and can sustain a monthly payment format.
As we noted above, rent verification is often used in place of, or to complement, a limited credit history. While first-time buyers often pay a slightly higher interest rate, an ability to show a strong rental payment history may get you a better rate with some lenders.
What about situations where you live with a friend or family member, contributing rent through different channels or not at all? In these cases, lenders will ask for at least 12 months, and often 24 months, of canceled checks or bank statements showing regular cash withdrawals that represent a rent payment. Other minor forms of proof may be needed, which your lender will discuss with you.
The rent verification form is simple and easy to fill out. It asks for basic info like your name and address, plus gives you a form to sign that authorizes the lender to obtain landlord information and other basics. The lender will fill in their own information as well, in case the landlord being contacted has any questions. When speaking to the landlord, the lender will ask for a verification of your occupancy, when it began, whether you’ve had any late payments in the last year, and whether you’ve been a positive tenant.
In most cases, rent verification is enough here. In some others, though, you may be asked to provide proof of timely payments or bank statements.
For more on verification of rent for first-time homebuyers, or to learn about any of our home loan services, speak to the staff at VIP Mortgage Inc. today.