Maintaining A Paper Trail

“I’M CURRENTLY RENTING, BUT I’M PLANNING ON BUYING MY FIRST HOME WITHIN THE NEXT YEAR. BESIDES MAKING SURE MY CREDIT IS GOOD, IS THERE ANYTHING ELSE I NEED TO DO?”

First of all, good for you for planning ahead! Making sure your credit is good is an integral part in buying your first home and getting your first mortgage. Beyond maintaining your credit, though, there’s another very important step you need to take: You need to keep a “paper trail” of rent payments for at least twelve months. If you have roommates and you aren’t the person responsible for paying the rent, the key to maintaining a paper trail is to pay by check. Since your potential lender will require proof that you’re able to make regular payments (and make them on time), you won’t have any kind of paper trail if you pay by cash or money order. If you do pay by check, you will have either the cancelled checks or bank statements as proof. Similarly, if you pay the rent directly to your landlord, you should pay by check as well to maintain your paper trail. Some lenders may accept a VOR (Verification of Rent, which is a statement of rental payments) signed by your landlord, but not all lenders will accept this. Finally, if you pay your landlord directly and by check, be sure that your checks are being deposited in a timely manner. Otherwise, your lender may consider those payments as being late—whether it’s your fault or not.  ∆