HELP!! I need loan advice!
Right now I'm getting a triplex inspected for purchase in lake Charles, Louisiana and I'm trying to work with a local lender. They said they cannot do 10% down with PMI because they said if it's three doors they consider it more commercial so they're offering me 15% down but my rate is 8.75%. they also told me it was a dscr but on the disclosure they have conventional checked off right now I told then we need to talk more but to be honest I've only used them so far. I'm tempted to start shopping around and I was curious what anybody had to say on this platform in regards to this. My credit score is at 810 and I have very low debt.
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Broker here -- the rate environment is a mess right now with everything moving this week, so 6.5% at 25% down on a triplex from a local lender is actually pretty decent if it's truly a conventional product with no points. Rocket at 6.99% was pricing you retail and not shopping it, so good move to go local.
On the DSCR confusion: what your first lender called "conventional/non-QM" and "DSCR" in the same breath is typical of a shop that doesn't know how to explain their own product. DSCR is a non-QM loan. Conventional is Fannie/Freddie. They're not the same thing. If the disclosure says conventional, that's what it is, but at 8.75% with 15% down that's not a conforming rate at all, so something was off with that quote.
The $125k DSCR minimum issue is real. At 20% down on a $150k property your loan is $120k, and a lot of the bigger non-QM shops won't touch files under $100k or $125k. Even the ones that go lower price you at a heavy penalty. On a file like this, conventional is probably the better path anyway. DSCR closing costs run 2-3 points on top of lender fees, which eats a lot of return on a smaller loan.