Lenders Requiring Verification Of Rent
Lenders Requiring Verification Of Rent:
If you apply for a new purchase mortgage loan or refinance mortgage loans, mortgage lenders require you to complete a complete mortgage application. The mortgage lender will determine whether to approve you for a new mortgage loan by analyzing your income, debt, assets, and credit score. Mortgage lenders have cutoff minimum credit scores. Most mortgage lenders want a minimum of a 640 FICO credit score. Other mortgage lenders have lower credit score requirements. Cutoff limits are set at 680 FICO, 640 FICO, 620 FICO, 600 FICO, 580 FICO, and 530 FICO. The lower your credit scores are, the more mortgage guidelines that will apply to you. Verification of rent is one of the requirements for those who have credit scores below 620 FICO.
Lenders Requiring Verification Of Rent: When Do Lenders Require VOR?
If your credit scores fall below 620, verification of rent will be required. Verification of rent is proof that you are currently paying rent and have done so in the past year. A rental receipt is not good enough for proving verification of rent. Verification of rent, also known as VOR, is proven by supplying a 12 month history of cancelled bank checks. If you are paying cash to your landlord and getting a monthly receipt, mortgage lenders will not honor that as proof of verification of rent.
Lenders Requiring Verification Of Rent: Renting From Property Management Company
Another option instead of cancelled checks that a verification of rent will be valid is if your landlord is a property management company. A written letter verifying your rent for the past year from a property management company will be a valid verification of rent even though you have paid them in cash. For those folks who are intending in buying a new home, make sure that you pay your monthly rental payments with a check. There are enough obstacles to overcome in the mortgage application process and verification of rent is one of them. It is a shame that you are paying your rental payments on time with cash and not getting credit for verification of rent.
What Happens If I Cannot Prove Verification Of Rent
Most lenders will require verification of rent. They will make exceptions if you do not have verification of rent but there will be certain guidelines and restrictions on the terms of the loan. If you do not have verification of rent, the lender may require a lower debt to income restriction. For example, if you qualified for a mortgage loan with a 56.9% debt to income ratio but do not have verifcation of rent, your debt to income ratio may be reduced to 45% debt to income ratio, thus killing the chances of you getting the loan approved or having to reduce your monthly debt obligations so you meet the new debt to income ratio requirements.