This form is much like an appraisal, but instead of determining the value of the home, its goal is to find out the “going rent” or “market rent” for similar homes in the area. This form requires 3 rental comparables (other similar homes in the area that are rentals) and the appraiser searches MLS or local newspapers in the area to find these. The lender uses this information to determine fair rents in this area, which helps them estimate the income this investment (tenant occupied) property is earning or could potentially earn. That income is added to (or subtracted from) the borrower’s other sources of income. All of this information can directly affect loan approval or denial, especially if the borrower’s other income sources are low.
(Ann Walsh - LendersAid)