Don’t Have Enough Credit to Buy a House? Use Your Rental History

 

Fannie Mae, the Federal National Mortgage Association just announced they will now allow underwriters of mortgage loans to incorporate consistent rental payment history in credit evaluations.  Previously, rental payment history was not factored into mortgage decisioning. This update effectively immediately will empower more renters, who were previously discouraged by insufficient credit standards, to become homeowners. 

 

Why Your Credit Score Matters:

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Credit scores and credit history are key factors in analyzing a borrower’s ability to pay their mortgage. Although, less than 5% of today’s renters have their rent payments reported by the credit bureaus on their credit report, so historically rental payment history has not been included in credit assessment. Due to monthly rent often being the greatest monthly expense for most individuals, Fannie Mae believes allowing taking rental payment history into account will improve mortgage eligibility overall.  

 

How Using Rental History Will Work:

With permission from mortgage applicants, lenders will highlight recurring and consistent rent payments in the applicant’s bank statements. Lenders will look at a total of 12 months of rental history in the applicant’s bank statements. Using rental history can only result in weighing positively towards their credit profile, as per Fannie Mae’s credit evaluation guidelines, any missed rental payments in the 12 months of bank statements cannot be factored in, as currently, renters can use credit cards, cash, or other digital payment options.  This data will then be entered in Fannie Mae’s automated underwriting system, to help boost approvability of the applicant’s overall credit profile. 

This new update is a major step towards housing equality, allowing for expanded home ownership opportunities in our and other underserved communities. Kevin Berju, Branch Manager PhillyMortgageTeam@afncorp.com NMLS# 137213


Article Written By: Kevin Berju 

American Financial Network NMLS # 137213


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Kevin Berju starts Philly Mortgage Team with over 25 years in the mortgage industry. Prior to working with residential and commercial mortgages, Kevin graduated with a business degree from Temple University, owned his own business, and worked as an agent for years in both commercial & residential Real Estate. With Kevin’s diverse knowledge of the real estate and mortgage industries, his clients are thoroughly guided throughout their home buying or refinance process. As a result of his knowledge, attention to detail, responsiveness to his clients, and exceptional work ethic, Kevin was awarded the Five Star Mortgage Professional recognition in Philadelphia Magazine for the past successive years as well as reaching the top 1% of all originators country wide since 2012 as designated by Mortgage Executive magazine.

As a mortgage professional for over 2 decades, Kevin is an invaluable resource for both first-time and experienced home buyers. With his accomplishment of the Certified Mortgage Planning Specialist designation, Kevin is placed in an elite group of the top 5% of mortgage professionals in the industry. Looking to Purchase or Refinance in Pennsylvania, New Jersey, or Florida? Kevin Berju is the Lender for You!


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