Mortgage Qualification / Payment History

Anonymous · ‎02-09-2012

Hi everyone,

We recently listed our home for sale in order that we could build a new custom home. Upon reviewing our credit report with a lender, they mentioned that we would have to establish a minimum 12 month on time payment history to qualify for a VA mortgage loan as we had some lates in the past. Well our house has only be on the market for 28 days and we received an offer. Eventhough we have made on time payments for the last 12 months, we will have to rent a place until the new home is finished. My question is, if we rent (a family member has a duplex for rent that will allow us to save more for the new house), how will the lack of rental payments impact our credit score and our ability to qualify for a new mortgage loan? My family member will not be reporting our on time payments to the CAs so do we need to consider a traditional apartment to ensure we get some reporting or will a letter from my family member stating an on time payment history be ok?

K_J · ‎02-09-2012

I don’t think landlords and management companies report your monthly payments to the credit bureaus. Although you would be reported if you broke a lease or got evicted and owed the landlord money and they turned the amount over to a collection agency. So, in a sense, the only credit you can really get from renting an apartment is a negative mark! LOL Now, it does count for rental history though when you go to move and need a reference. But, on time rent payments are not counted into your FICO score.

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namvet · ‎02-09-2012

@Anonymous wrote:
Hi everyone,

We recently listed our home for sale in order that we could build a new custom home. Upon reviewing our credit report with a lender, they mentioned that we would have to establish a minimum 12 month on time payment history to qualify for a VA mortgage loan as we had some lates in the past. Well our house has only be on the market for 28 days and we received an offer. Eventhough we have made on time payments for the last 12 months, we will have to rent a place until the new home is finished. My question is, if we rent (a family member has a duplex for rent that will allow us to save more for the new house), how will the lack of rental payments impact our credit score and our ability to qualify for a new mortgage loan? My family member will not be reporting our on time payments to the CAs so do we need to consider a traditional apartment to ensure we get some reporting or will a letter from my family member stating an on time payment history be ok?

I don't see a problem just have your family member fill out a VOR (verification of rent) form to vefify residency. We do this all the time. Your lender will supply this form when and if it is needed. When you are building a home and waiting for completion you have to live some place. Just pay your rent with a check.

Anonymous · ‎02-09-2012

Great. Thanks for the feedback.

namvet · ‎02-09-2012

@Anonymous wrote:
Great. Thanks for the feedback.

Best of luck to you!

Anonymous · ‎02-09-2012

Rental payments are not reported to CA - I've been renting for 10 years without a single eviction/late payment and I've had to work diligently to repair my credit. What will count is the rental payment history- either a print out of payments, receipts, cleared checks, statement from landlord - also make sure you pay your rent with a check, cash/money orders aren't worth the hassle to verify.