Fannie Mae will include rental history as part of the underwriting process, which makes it easier for borrowers to qualify for a mortgage loan – starting September 18… With the rule change, 17% of previously rejected borrowers will now only be approved based on their lease history. Here’s a look how you can meet the requirements.
Why is your rental history important?
Your credit rating is an important factor in whether you are eligible for a home loan, and this rating is based on your credit history, as reported by Equifax, TransUnion. and Experian. Using these reports, lenders want to see a long history of consistent payments for service and installation contracts.lend as it shows that you are probably a responsible borrower.
However, even though rent is usually the tenant’s biggest expense.s monthly budget, landlords only report payments to the big three credit bureaus 5% of cases… This is damn it shame how a recent study by Experian found that approximately 75% of participants whose rental payments were included in the report improved their credit scores by 11-29 points.
This is a potential boost to your credit rating – here’s why services that exist solely to report rental payments to these bureaus, for example Plastiq and RentMoola… However, these third-party services typically reduce the cost of each payment by 2-3%, which is quite a lot for payments of thousands of dollars a year.
How Fannie Mae’s New Rules Help You Get A Mortgage
However, as of September 18 Fannie Mae’s underwriting system automatically detects rental payments from the applicant.s bank Account Information. And while Fannie Mae does not process loans on its own, their system essentially pre-approves the applicant for private lenders. The company said the good news for borrowers is that missed payments will not be subject to valuation penalties.
In terms of impact, according to Fannie Mae’s own analysis, 17% of borrowers who have not previously received mortgages will now qualify.
What should I do next if I want to apply for a mortgage?
If you are looking for a new home now, cI am waiting apply for mortgage after the changes take effect in September. If your mortgage application was previously rejected, it may very well be approved this time.as your rental payments are significant expenses that can show lenders that you really are reliable borrower.