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jk02, Home Buyer in Bronx, NY

Will it hurt my chances of getting a mortgage if I currently pay my rent by cash?

Asked by jk02, Bronx, NY Thu Dec 13, 2012

The landlord in not an incorporated business.

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Jim Simms’ answer
It depends on how weak or strong your circumstances are on the rest of the info in the mortgage loan application. All large lenders use an AUS which weighs the total application, very few loans I closed this year required a VOR, verification of rent. If the entire decision boils down to if you can document rent it may be a good idea to reflect on your entire financial structure. Lender objections are a strong signal for the borrower to do some internal reflection. Good luck,

Jim Simms
NMLS # 6395
Financing Kentucky One Home at a Time
Web Reference: http://jamessimms.com/
0 votes Thank Flag Link Fri Dec 14, 2012
It will not help. Banks like to see all transactions going through a checking account. Most lenders will take a verification of rent (VOR)from your land lord if you have strong credit , great job history ect.
0 votes Thank Flag Link Thu Mar 21, 2013
I rarely see rent being verified unless a borrower has poor credit or no credit. When someone has poor or no credit, an alternative credit history is provided. A borrower would then show payment histories for rent/housing, utilities and/or insurance (auto). For alternative credit, an underwriter would prefer to see cancelled checks as those are easy to track.
0 votes Thank Flag Link Fri Dec 14, 2012
I have see this as an issue more than once, but don't get discouraged. I would get receipts so that you have proof that your rent is being paid. The bank might also ask for your bank statements to show that you are actually taking out the cash to pay for the rent each month. You could also get a letter from your landlord stating that you have paid your rent for x number of months in cash. Just make sure you have as much proof as possible that you are actually paying your rent. Good luck!
0 votes Thank Flag Link Fri Dec 14, 2012
It depends on a lot of factors (such as other credit history, type of loan/underwriter). Talke with a mortgage professional and get preapproval and see what they tell you the conditions for the loan will be.

Best of luck!
0 votes Thank Flag Link Fri Dec 14, 2012
It would depend on the underwriter for the lender as to whether it would be a problem or not. Some lenders will ask for 12 months records of payments and others may not. If you can I would start paying your rent by check to establish the payment history. This way you have your history of payment.
If you have a local lender or bank that you work with you should ask this question of them. They are the experts and could provide you with accurate information.
0 votes Thank Flag Link Thu Dec 13, 2012
The problem is that we are already at the end of our underwriting process. The person at the bank we are working with sent us an email earlier today that everything was a go and then came back 2 hours later with the problem that we don't have a reciept record for our rent. What we have, and provided to the bank, is our bank statements that show a monthly withdrawal for our rent and a letter from our landlord stating that we've paid each mont and on time for the last 11 years. We told the mortgage agent weeks ago that we paid by cash and he said it shouldn't be a problem. It seems now it's a problem because our landlord doesn't have an LLC, so there's no "paper trail". Can they refuse us for this reason? BTW...I'm an employee at the bank.
Flag Thu Dec 13, 2012
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