I’m in my final stages of underwriting for an FHA loan. My front end ratio was a little bit over the requirements so now they using my current rental payment as a compensating factor. My current rent is a little over $300 more than the mortgage payment will be. Because we are using this as a compensating factor, they are requiring a VOR from my property management company. My rent actually comes directly out of my paycheck as a payroll deduction because I work for the company that manages my building. So every 2 weeks, they take out rent, total yearly rent divided by 26 pay periods. Because of how the pay periods are set up, some month’s I end up with a balance because the rent is taken out two times. This usually is not a problem because twice a year I get paid 3 times in a month which gives my account a credit. Recently, they have been contacting me to pay the balance (under $250) each month so my account is at $0 when they close for the month. I have been doing that except in January I paid part of the balance in before the month ended but paid that remainder of $70 on February 5th. My lease stipulates that rent is due on the 1st but there is a grace period to the 5th. Would that $70 be considered a 30 day late? If it is considered late (or if she puts that it is 30 days late) will that kill my loan chances?
***Are small balances considered the same as an entire late payment when it comes to rent?***
Wow that seems extremely complicated. This one will probably have everyone from the LO to the processor to the UW scratching their heads..
My gut feeling thinks it will be ok..
Since this is a management company who handles the rent, it only matters what they report since you won't be asked for copies of cancelled checks. So if they say you are 30 days late, then it's 30 days late. That is not to say you can't dispute that with them though. You should contact them and ask how they'll complete the verification of rent form. If there are any 30+ day late payments in the past 12 months then it normally can't be used as a compensating factor, and would actually be considered a negative factor. So contact the management company verification department ASAP.