A New Tool To Help Renters Qualify For Mortgages

Timely rent payment history and mortgages
On-time rent payments may help you qualify for a mortgage.

Home ownership is still “The American Dream”, yet the current economy is providing significant headwinds for many Americans desiring to build credit and ultimately purchase a home. In addition to inflationary pressures and all-time high fuel prices, rental prices have also increased substantially over the past few years. (To read more about rental price increases, click here or here.) With this said, beginning on July 10th, 2022, renters will have another tool to assist them with qualifying for a mortgage or even lower their interest rate.

The importance of timely rent payments

Freddie Mac is an alternative name for the Federal Home Loan Mortgage Corporation (FHLMC). This organization was chartered by Congress in 1970 to support the U.S. housing finance system and to help ensure a reliable and affordable supply of mortgage funds across the country. Essentially, Freddie Mac operates the secondary mortgage market by buying loans that meet their standards from approved lenders. As a result, the approved lenders can then continue providing loans to qualified borrowers, thus keeping the capital flowing in the housing market.

As of July 10th, 2022, approved lenders will now be able to submit an applicant’s rent-payment history automatically to Freddie Mac for loans that they plan to sell. This will be done automatically through Freddie Mac’s automated underwriting system known as the “Loan Product Advisor (LPA)”. With this said, it is important to note that lenders won’t automatically know whether or not a borrower has been paying their rent on time for a year or more. In order for borrowers to take advantage of this program, they must give their lender permission to submit bank account data that verifies  on-time rent payments for 12 months. Eligible rent payment data includes check, electronic transactions or digital payments made through Zelle, Venmo or PayPal.

Summary

One of the first steps towards home ownership is a positive credit history. Unfortunately, millions of Americans currently lack a credit score or have limited credit history. By being able to factor in timely rent payment history, this should be able to assist many Americans towards accomplishing the goal of home ownership. In addition, this underscores the importance of timely rent payments when the ultimate goal is a home purchase. Do you have questions regarding home ownership? Contact Natasha at Live South Florida Realty, Inc. today!

At Live South Florida Realty, Inc. we have assisted many clients with their real estate needs. Are you looking to buy or sell a property in South Florida? Now more than ever, it is critical to have a qualified real estate team and the proper search tools behind you. Live South Florida Realty, Inc., has been a leader in the South Florida market for many years. Let our team of professionals assist you with buying or selling your piece of paradise today! In addition, our trusted “Florida Home Search” app is available on the Apple App Store and Google Play Store. With real-time MLS feeds, this app lets you set your own alerts to notify you as soon as a property meeting your needs hits the market. Furthermore, it will also let you know of recent closed sales in your area so that you may be even more educated on the market. Be sure to download this app for your smartphone or tablet today!

By natasha moore

REALTOR® with Live South Florida Realty, Inc.

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