Five Things to Know About Verifying Rental History for a Mortgage Application

Part of the mortgage application process is to verify the history of your current housing expenses, whether it is a mortgage or rent payment. The bank wants to see that you have been making your current housing expenses in a timely manner, so they can guess how you will pay your mortgage, etc in the future. This is especially important for first time home buyers, with no mortgage debt history.

 

1. Do not assume the bank won’t ask for a rental verification right before the closing:  the lender might not request this until it gets to underwriting or right before the closing. Do not assume you are home free, until the bitter end.

2. If the landlord is an individual, the lender will ask for 12 months cancelled checks: if you pay your rent to a private person, the mortgage lender will want to see actual canceled checks or copies of money orders. Cash, signed affidavit by the landlord or a verbal verification won’t cut it.

3. If the landlord is company, the lender will contact them directly, who now knows you are moving: The lender will send a form directly to the rental office, so if you do not want them to know you are moving, they will find out soon enough. You are better off telling them before, so it is not a surprise and they give you a bad rating or throw it out just to spite you.

4. If you pay your rent late every month, you might not get the loan: there are programs, such as FHA loans, that might not allow a mortgage approval to someone that has one, two or more lates with their current housing expense.

5. If the lease is not in your name or you don’t actually pay rent, don’t lie about it on the application: do not say you pay rent if you don’t, because when they want to verify it, you got nothing to show.

Most mortgage programs offered by major lenders will require some type of verification, so be prepared.

The bank should ask for the last 12 months canceled checks if your landlord is an individual or a completed Verification of Rent Form by a corporate landlord. If the lease is not in your name, you pay cash or live rent free, please tell the loan officer up front. If you pay 500 a month, don’t be a big shot and say you pay 1,500 a month. If you pay late every month or have not paid in 6 months- you have a problem. Best to fess up in the beginning of the process since Big Brother is watching pretty intently these days!

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