Verification Of Rent On Manual Underwriting

Verification Of Rent On Manual Underwriting Is Required By Lenders

Verification of rent is one of the most important items you can provide a residential mortgage lender to qualify for a residential mortgage loan.  Even though rental payment history does not report on the three giant credit bureaus; Transunion, Experian, and Equifax; verification of rent provides probably the most weight and proves to the mortgage loan underwriter that you can handle your mortgage payment from going from a renter to a home buyer.  Verification Of Rent On Manual Underwriting is required by mortgage lenders. For example, if you are currently paying $1,000 in monthly rent and have been timely for the past 12 months with no late payments on your rent, and your new mortgage payment is $1,000 or slightly more, this proves to the mortgage loan underwriter that you will be able to manage your new mortgage payment with no problems.  If you are currently paying $1,000 per month in monthly rent and your new mortgage payment will be $1,500 per month, the new payment will have a 50% rental shock factor in it.  Payment shock is the percentage of the increase from the rental you are currently paying to your new monthly mortgage payment.  Rental shock factors are considered by mortgage loan underwriters.

Mechanics Of Verification Of Rent On Manual Underwriting

Verification of Rent is not required many times but providing VOR shows a lot of weight and Verification Of Rent On Manual Underwriting is mandatory.  All borrowers mortgage files need to go through the Automated Underwriting System and many times when a borrower has credit scores under 620 FICO or a lot of collection accounts, the AUS will require VOR. In the event if AUS renders a referred/eligible then it needs to be downgraded to a manual underwrite. Verification Of Rent On Manual Underwriting is mandatory and borrowers who cannot provide it cannot qualify for a mortgage loan. Many renters pay their rent payment on time to their landlords every month with cash and they get a rental paid receipt from their landlords.  Unfortunately, although the renter is making timely payments to their landlords, cash payment to landlords cannot be used as proof of verification of rent.  Even though a renter can get rental receipts that the rent has been paid with cash, cash is non-existent in the mortgage industry.  If you are renting your apartment or home from a private landlord and not a property management company, the only way verification of rent can be used is by providing the mortgage loan underwriter 12 months of cancelled checks paid to the landlord.  One or two cash payment during the 12 month period will disqualify the verification of rent.  Make sure that if you are making your monthly rental payment that you make it with a check payable to your landlord.

If you are renting your home or apartment from a registered licensed property management company, a letter from the property manager stating you have been paying your rent on time for the past 12 months is sufficient.  You can your monthly rent with cash and as long as the property management company is a registered, licensed property management company, a letter and receipts stating that you have been making your monthly payments on time for the past twelve months is sufficient.

Irregular Monthly Rent Payments

Mortgage loan underwriters want to see the renters lease agreement and will review the lease agreement.  Most lease agreements are standard where it requires the renter a security deposit and the monthly rent amount as well as the terms.  Mortgage underwriters will want to see a consistent set monthly rent amount for every month for the past 12 months.   What happens if you have paid lower than your rent amount for one or more months due to circumstances?  If you have not paid a steady fixed rate every month for your rent, then the mortgage loan underwriter will want to see why and a letter of explanation is required.  This type of case scenario is often common where the landlord may allow the tenant to do minor repairs on the home they are renting and deducting it from their rent payment.  Unfortunately, mortgage loan underwriters will see this as a red flag and will require the mortgage loan borrower proof showing that the reason for the reduced rent for a particular month was due to repairs.  Receipts will be required and possibly, a letter from the landlord will be required as well.

Gustan Cho

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The information contained on Gustan Cho Associates website is for informational purposes only and is not an advertisement for products offered by The Gustan Cho Team @ Gustan Cho Associates or its affiliates. The views and opinions expressed herein are those of the author and/or guest writers of Gustan Cho Associates Mortgage & Real Estate Information Resource Center website and do not reflect the policy of Gustan Cho Associates Lenders Network, its officers, subsidiaries, parent, or affiliates.

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