Don't Pay Cash For Your Rent!

By
Mortgage and Lending with Cross Country Mortgage Corporation 770-634-4021 NMLS #206275

Attention would be home buyer, a word of caution.  Don't pay cash for your rent!  Although paying cash for rent may be your landlord's preference, this is going to be an issue when you decide you want to purchase a home. 

If you are renting from an apartment management company or through a property manager, a verification filled out by the property manager will be acceptable supporting documentation for your good payment history.  If you are renting from an individual, you must document the landlord's claim that you have paid your rent on time.  A receipt with a money order might be acceptable, but as the guidelines continue to change there is no guarantee that it will be when you buy.  The best way to do that is with a canceled check. 

Now, there have been some prospective home buyer's that I have talked with lately that told me they don't have a checking account.  This is the first thing to is open a checking account!  You aren't going to make a mortgage payment paying cash.  The earlier you get this set up, the better. 

As part of the underwriting criteria, your last two month's bank statements required.  Not only do you need to provide the bank statements, but the information each line of the bank statement is also reviewed.  Two things to watch for, running the balance down to almost nothing and over draft charges.  The over draft charges, can be the difference between a loan approval and a loan denial. 

If you are looking for other suggestions on what to do before you buy, please give me call.

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Kathleen Sheehan
Senior Loan Officer

 NMLS #206275
770-634-4021  Cell

855-496-6722 Fax
ksheehan@myccmortgage.com

 

 

 

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The opinions and general information in this blog are soley those of Kathy Sheehan.  Specifics regarding an individual case should be discussed in detail with a loan professional.  For a confidential consultation, please feel free to contact me via phone or email.  All terms and conditions are subject to change.

 

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Rainmaker
172,717
JodiAnn Garone
CENTURY 21 Cataneo & Associates - Holmdel, NJ
Bringing you Home!

Kathy,

Some good advice to share with those looking to buy a home and share in the american dream of home ownership.

Aug 01, 2011 09:57 PM #1
Rainmaker
835,443
Tatyana Permanova
Highlight Realty - Fort Lauderdale, FL
561-756-6962 - Miami, Fort Lauderdale | Boca Raton RE

I could not agree more!!! Paying cash is a bad idea!!!

Even for next rental you need VOR!!!

Aug 01, 2011 10:03 PM #2
Rainer
251,123
Colin Call
RE/MAX Integrity - Eugene, OR
Principal Broker

Hi Kathy,  Great blog, and good information.  Also, thanks for commenting on my blog earlier;-)  Colin Call, Remax Integrity, Eugene, OR 541-579-1615

Aug 01, 2011 10:11 PM #3
Ambassador
1,448,465
Jon Zolsky, Daytona Beach, FL
Daytona Condo Realty, 386-405-4408 - Daytona Beach, FL
Selling Daytona paradise for heavenly good prices

Kathy - yep, this is an excellent advice. It is easy to follow the habit and find out later that it affects your ability to buy anything

Aug 01, 2011 10:13 PM #4
Rainer
267,779
Donald Reich
Prudential Centennial - New Rochelle, NY

You make a great point. Lenders want proof of what your rent is, and that you pay it on time. You don't have that if you pay cash!

Aug 01, 2011 10:18 PM #5
Rainmaker
687,124
Pacita Dimacali
Alain Pinel - Oakland, CA
Alameda/Contra Costa Counties CA

Kathy

There's another reason why paying with cash may not be a good idea. Having proof of payment (cancelled check) is also proof of tenancy which comes in handy if one lives in a rent-control city.

My sister's roommate had a rent-controlled flat in San Francisco. When my sister started rooming there, she paid her share of the rent directly to the landlord, and not to the roommate. When the roommate left, because my sister was shown as having paid rent, too, she took over the rent-controlled flat. That flat would have cost twice as much to a new renter.

 

Aug 02, 2011 02:14 AM #6
Rainmaker
578,239
Kathy Sheehan
Cross Country Mortgage Corporation 770-634-4021 - Atlanta, GA
Senior Loan Officer

Thank you all for your input.  As underwriting criteria continues to change it is easier to address an issue like this upfront.  I didn't think about it for another rental, since I don't work with renters.

Aug 02, 2011 09:03 PM #7
Rainmaker
431,487
Wandanna Melliphant
Pickering, ON
" Wandanna Sells Pickering, Ontario Homes!"

Hi Kathy,
Thanks for sharing.
I totally agree with paying rent from a checking account. Making large payments especially consistently via cash is never a good idea, because there is no paper trail.

Aug 08, 2011 10:25 AM #8
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Rainmaker
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Kathy Sheehan

Senior Loan Officer
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