August 11th, 2009 8:54 AM

Every American teen dreams of the day he/she will leave their parents home and rent their first apartment. What a wonderful time it will be. Independence. There is no one to boss you around. Most people don’t plan for the future. Are you thinking of purchasing your first home? Are you currently renting an apartment? Is your apartment part of a development or a single person with few properties?  How are you paying? Check, Cash, or Money order?

Today, the reality is that lenders for first time homebuyers would like to see  12 to 24 month rental history. If you are renting from an apartment complex, which has its own management onsite generally lenders will accept a written statement from them containing your payment history. What happens if you’re renting from the single person that owns a couple of properties and is managing it themselves? The lender wants to see canceled checks for the last 12 to 24 months. There are two reasons.  The first reason is to see if you can pay the rent on time.   The second reason is the single private owner does not report evictions, late payments, or rental history to a reporting company.  If your checks were dated before the rent was due then you’re a good candidate to pay your mortgage on time. But if you have inconsistencies in your rent payments the underwriter will have to make a decision based on certain guidelines published by Fannie Mae and Freddie Mac.  These quasi-governmental agencies make the guidelines for lenders.  They are the biggest companies that purchasing mortgage notes and selling them on the market.

Underwriters are paid by the lender to ensure that the borrower will have the ability to pay the mortgage. If you don’t fit into the guideline criteria, therefore, you will not be able to obtain a mortgage. Are all lenders guidelines the same? For the most part, yes.  Otherwise, lenders have thir own criteria besides Fannie Mae and Freddie Mac guidelines. 

Remember, when applying for a mortgage make sure you have canceled checks to prove your ability to pay rent on time. Cash and money orders will not be sufficient because those forms of payment can’t be proven like canceled checks.  I have seen many people denied because of not having canceled checks when renting. 

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