Many potential Home buyers already live in a house, the only difference is that they rent from a Landlord while they prepare for owning a home themselves. In many of these cases, the Lender for a new purchase will require a rental history, so what happens when your landlord refuses to provide it.
This was an issue that ‘Cathy’ was facing when we first spoke. Her husband, four kids and her wanted to move out of their rented home and finally buy a home of their own. Unfortunately, there had been some instances of poor communication and frustrations between her and her landlord. Because of this, he refused to provide a rental history for Lender.
On top of this, Cathy sometimes paid in cash, sometimes paid with checks and paid varying amounts over the course of the month due to income fluctuations.
If she had paid by check: We could get a copy of the cancelled checks to prove her payment history. With cash there are very few options.
My first thought was a personal plea to the Landlord. That went less than ideally. So I had Cathy get me every single check she had sent over the past 2 years along with each bank statement. When reviewing these I noticed a consistent withdrawal on the same day one of her checks were written out. Cathy then mentioned that the cash she paid with was always taken out at an ATM, on the same day each time.
Cathy now owns her new home, having provided the underwriter with her bank statements, check copies and a detailed explanation stating exactly when each payment was made and what source they were made from to prove she was never late on a payment in two full years of renting.
In a very rare situation, listening to the borrowers story can help put the pieces in place to get the evidence needed for a gap like this. Ideally, if you are renting…pay by check! It will make your life much easier when the next step comes and you take the leap to become a homeowner!
Have a great week!
Image courtesy of ponsulak / FreeDigitalPhotos.net