When talking with potential clients seeking mortgage financing, one of the very first things I do is provide the address to my website. I’ve loaded my mortgage website with helpful info and tools to benefit all those that visit there.
One of the bits of info that I use and stress the importance of, is my “Mortgage Checklist“. This list includes the info and documentation that is typically needed for mortgage application and processing. Having this list available ahead of time helps applicants tremendously and makes their mortgage application and processing go much more quickly and smoothly.
When viewing my list, you will see that those mortgage applicants presently renting are asked for info regarding their current rental status. The info I need includes: The Name, Address, and Telephone Number(s) of their Landlord. I also need a letter from the Landlord stating how much is paid in rent monthly … plus a signed Statement that states thatthe Renter “Paid Said Amount as Agreed for the Past 12 Months”.
Why is this info needed? A record of 12 consecutive rental payments made on time is extremely important to Lenders and Underwriters. It establishes a payment history and alsoproves a pattern of consistent timely payment.
Many Renters believe that rental payments are notreflected, and cannot be made part of, their Credit Report or credit scoring. And in the past, that has been true. But things are changing regarding this issue.
Changes were already made by one credit bureau …Experian … as of May, 2012. Since that date Experian RentBureau has been in place. Through their RentBureau, Experian offers a service to landlords that helps them collect rental payments electronically. It updates all reported rental histories every 24 hours. Note: Landlordsand Renters must opt into this reporting program to reap its benefits.
Other types of “non-traditional credit references” are now being reported to other reporting bureaus, as well. FHA has gone on record as a strong advocate of this reporting and has pressed for Lenders in larger numbers to take these types of credit references into consideration when underwriting mortgages.
What are considered “non-traditional credit references”? Utilities, gas and electrical payments, cell, phone, and cable are examples of this type of credit. And in many cases, they are now being reported. Also being considered are daycare, insurance payments, medical bill payments (those not attributed to insurance coverage), internet, and retails store credit.
This is especially good news following the recent housing crisis. These “non-traditional credit references” and their payments have definitely become much more pertinent. In my opinion, there couldn’t be a better time for these timely indications … these common sense reflections of a mortgage applicant’s mindset … to be allowed into play.
Those hoping to become homeowners for the first time and those wishing to return to home ownership, must be allowed a path to do so. They must be given a better way to establish good credit for the first time, but also a method to heal from past foreclosures, bankruptcies, and short sales. When credit agencies and Lenders take these more “non-traditional credit references” into consideration within their credit scoring, that is better accomplished.
As a Mortgage Lender, I believe the good news is that these changes are already being made or are in the works within some credit reporting agencies. Hopefully others will follow suit.
Should you be a Renter and wish to take part in and benefit from the Experian RentBureau program … talk with your Landlord. Provide them the info below: