Tuesday, June 14, 2016, PM | 1 Comment
Applying for a mortgage for the first time can be intimidating. The wisest thing to do is to search for as much information as possible and be prepared.
There are many websites available from where one can get tips and techniques, but not many ever mention the idea of a free check rental history report.
Like it or not, the approval process for the mortgage will depend on variables in one’s past history, and not strictly on income and credit reports.
Knowing the small things that contribute to a healthy history might just be the difference between a positive and negative outcome.
For a good response when applying for a mortgage, keep the following in mind:
One of the first things the mortgage officer will look at when reviewing history is the consistency of payments. They will want to determine that the lender has been a consistent renter throughout the period they have been renting.
Regardless of the number of years one has been renting, the mortgage officers like to see that payments have always been made consistently and on time.
One or two payments will likely not be a deal breaker, but consistently coming in late could be a problem.
The point is if one can demonstrate that they can be trusted with the small payments, then chances are that they can handle the thousands that they are applying for.
Mortgage lenders also look at the eviction history of the borrower. They will likely want to know all the details about any past eviction from a rental unit.
Evictions happen for a number of reasons, but most of them are normally because of extremities. If the eviction was because of payment history, then that would be a huge red flag. They will likely want to speak with past landlords to verify this information.
For many people, credit and income histories are not perfect or ideal, so a problem with evictions could end up being a deal breaker. However, if it happened long ago then it might not have as much of an impact as a recent one.
This is what is most commonly preached and what is on the minds of many people when they apply for mortgages. Credit scores give the lender an idea of what kind of borrower they are dealing with.
A big part of the credit score will be determined by payment histories on other debts. Does the borrower make their payments on time or do they consistently miss out?
Those who consistently miss out or make late payments on loans might end up with a low score. Do everything possible to keep the score up throughout the borrowing history.
Investment in rental or residential property most of the time requires financing for majority of investors. For one to begin their investment journey, they must understand what it takes to get this financing.
Some aspects of one’s past might seem harmless, but cumulatively, they will affect the borrower’s standing with the bank, lender or financial institution.
Stephanie Clarke is a real estate expert and editor. She runs a company that helps renters find the perfect property or apartments. She also assists and advises tenants on the importance of and how to obtain a free rental history report.
- Aug 14, 2016: How to have the best rental background check in place - The Bridge