There are a few elements of certain mortgage situations that are unique to first-time homebuyers, and one such element is known as a verification of rent. Often used for people who do not have a significant credit history, but also simply required for first-timers by some lenders, verification of rent is a process used to ensure a few important factors for repaying the loan.
At Primary Residential Mortgage, we’re proud to offer several great mortgage purchase programs for a variety of buyers, including first-timers. What is the purpose and function of rental verification during many mortgage situations? Here are all the details you need to know.
Lenders need to be able to feel confident that a mortgage will be repaid properly, and rent verification is often used to assist here when there isn’t too much other evidence available. Those who have never bought a home before, and especially those in this situation who have limited credit histories or other financial factors on their record, may not have enough such evidence on hand to show a lender that their income and expenses are in a safe enough place to lend the mortgage funds.
This is where verification of rent comes in. Your lender may ask you to sign a verification of rent from whoever you’ve been renting from, which proves you’ve been paying a rental sum for some period of time, usually at least two years. If your rental payment history is particularly strong and can be verified by landlords, lenders will be more willing to accept risk and lend you larger sums.
Luckily, verification of rent forms are pretty simple and straightforward. They’ll require some basic current and prior landlord information, such as names, addresses and contact numbers. They’ll also require your signature to show that the lender is authorized to act on your behalf here, plus the lender’s own information will go on the form in case the landlord wants to reach out with questions.
From here, other details will include when your occupancy in the given rentals began and ended, whether you had any late payments, and general information about your quality as a tenant.
In most cases, verification of rent will be all that’s needed for first-time buyers in this sort of situation. In some others, though, additional information like canceled checks, bank statements or other proof of payment might be requested to confirm that payments have been made on time for a given period.
In other situations, a first-time homebuyer will currently be living with a friend or family member, possibly contributing to rent or using other forms of compensation. If you can provide proof of payments made to these individuals, this will usually suffice. If you cannot, lenders will usually accept bank statements showing regular cash withdrawals monthly that offer this same level of proof.
For more on verification of rent within a mortgage situation, or to learn about any of our mortgage loan services or rates, speak to the staff at Primary Residential Mortgage in Fort Myers today.
*PRMI NMLS 3094. PRMI is an Equal Housing Lender. Some products and services may not be available in all states. Credit and collateral are subject to approval. Terms and conditions apply. Programs, rates, terms, and conditions are subject to change and are subject to borrower(s) qualification. This is not a commitment to lend. Florida Office of Financial Regulation MLD646. Opinions expressed are solely my own and do not express the views of my employer.