If you’re renting and have been paying on time, I’ve got good news!
On Sunday, July 10, they made it easier for you to buy a home, even if your credit score isn’t quite that high.
Starting last Sunday, Freddie Mac (the organization that helps first time home buyers get funded) now considers on-time rent payments as part of the process that decides if it will lend money or not.
This is big because so many people who rent don’t have an existing credit history. So verifying that you pay your rent on time helps lenders see how candidates handle money.
So if you pay your rent on time, that will now show up in your favor when you apply for a loan.
In order for it to work, you must be a first-time buyer and have a 12-month rent history. With your permission, the mortgage broker or mortgage lender will submit your bank account data to the LPA (Loan Product Advisor…the system that decides on mortgages).
It will look for 12 months of on-time rent payments and determine if you’re eligible.
The bank data is obtained from designated third-party service providers using the same automated process used to verify assets, income and employment.
You can get this benefit even if you pay your rent in cash. The landlord will have to verify, and the lender will have to manually underwrite, which might get complicated. But it is possible.
There’s a lot more to getting a home loan than just paying your rent on time, but this is very helpful for those who rent. If you need help finding a reputable lender, let me know, and I can recommend some to you.
As always, if you need any help with real estate, let me know!