Importance Of VOR And Verification Of Rent Requirements
Verification Of Rent Requirements Explained:
Verification of rent, also known as VOR, is one of the most important credit factors in the mortgage underwriting process. Verification of rent probably has more weight than any other credit tradelines in the mortgage underwriting process. Most renters can easily provide proof that they have been paying timely on their monthly rent payment but the only way the verification of rent can be used is via cancelled checks and/or a letter from a registered property management company. A rental receipt is not an acceptable form of verification of rent nor is a letter from the landlord.
Verification Of Rent Requirements From Private Landlord
If you are renting your home or apartment from a private landlord who does not own nor operate a registered licensed property management company, you need to be paying that landlord with a check and need to provide cancelled checks from the previous 12 months in order for you to get credit for verification of rent requirements from your mortgage lender. Cash payment to your private landlord does not count and cannot be used for verification of rent. Although your landlord may give you a receipt or a letter attesting the fact that your are paying your rent timely, it will not count towards verification of rent. Verification of rent requirements is extremely important for those potential home buyers who have credit scores lower than 620 FICO and for those who needs a manual underwrite in order to get a mortgage approval. We will cover this important topic in a later paragraph.
Rental Verification Requirements From Property Management Company
If you are renting your home or apartment from a registered licensed property management company, the property management can get you a letter on their letter head and that can serve as verification of rents. You can pay cash to the property management company and as long as you have been timely on the past 12 months rental payments and the property management company can write you a letter stating your timely payments for the past 12 months, it can serve as a verification of rents for mortgage underwriting purposes.
Verification Of Rent Required If Automated Underwriting System Requests It
There are times when I run a mortgage application through Fannie Mae’s Automated Underwriting System that the resulting DU Findings will require verification of rents. If that is the case, verification of rents is mandatory. Another important aspect with verification of rent is that a mortgage underwriter can decrease your maximum debt to income ratios if you do not have verification of rents due to rental shock. Rental shock is when you have no verification of rent and your housing payment goes from zero to a new mortgage of $1,500. This is a very bad thing for you not to have verification of rent. However, if you have verification of rent of $1,300 per month and your new proposed mortgage payment is $1,500, there is no rental shock since your new mortgage payment will only be $200 more than your current rental payment which is verified via verification of rent.