Is a refinance right for me right now?

Question

Right now my current big name lender has been calling me for a week to refinance. I haven't taken his call because in previous conversation's we ran the number and there was almost no savings; but it increased my loan by over 10k in refinancing costs. I currently have a 6.99% interest rate and would love to get it lower if possible but that def. wont happen with this company...

I was thinking if maybe a DSCR loan would be the way to go or would a conventional refi be better?

I was thinking if maybe a DSCR loan would be the way to go or would a conventional refi be better?

Elias Halvorson · Answer

Dude, help us help you. Need more info. Nobody can tell you anything with such little info. What type of loan are you currently in? What is the property type? Condo? Single family? Duplex? Or? What is the mortgage amount? How much is your property worth? What is your credit score? Need all of those questions answered before anyone can give you decent advice.

Andres Montbrun · Answer

Mike, I think the advice here about waiting until there’s at least a 1% drop makes sense if you’re looking at the rate in isolation.

One thing I’ve noticed lately is that most people are making the refinance decision using static rate quotes, when in reality, market conditions shift daily — sometimes presenting short-lived opportunities where the numbers do make sense, even if your lender says otherwise.

We recently came across a tool that tracks your exact loan terms against market movements in real time, and sends you an alert when a refinance could genuinely save you money after closing costs. It does the “breakeven math” for you every day, so you’re not relying on a lender’s sales pitch.

The benefit is you don’t have to guess or take calls that don’t pencil out — you’d only act when the numbers hit the threshold you set.

If you'd like, I can point you toward it — it could be useful whether you opt for DSCR, conventional, or just wait.

Jake Yuskaitis · Answer

With your FICO you can for sure get lower than 6.99%, but it has to be worth it. There will still be closing costs, etc. I just quoted someone 6.2% DSCR no income, no taxes yesterday so it is possible.

Erik Raz · Answer

Unless I would really need the money I would not refinance. If I would have a great deal and I am short by X amount. That's a different story.

Zachary Deal · Answer

Hey Mike, a 6.99% is a solid rate still based on the market (depending on LTV, credit score, DSCR, property type, etc) you could lower it some but likely not enough to make it worth it. Waiting until rates drop further is likely your best bet.

Zach Wain · Answer

You said DSCR, so that means it is a rental home.  You will not find a refinance worthwhile for any rental home if you are at 6.99%.  The added closing costs to buy the rate down are not worth it!  Wait, and hope rates move lower

Jeffrey Blais · Answer

My advice is the same as Erik's.  Ideally you will want to reduce the interest rate by 1%.  Hopefully better days are ahead for mortgage interest rates!!

Erik Estrada · Answer

Honestly you are better off waiting until you see a full percentage decrease in rate to refinance. Unless you are planning to cash out and deploy the proceeds into another performing asset.

Stacy Raskin · Answer

Whether you do conventional or DSCR depends on a couple of factors. Will you cashflow on actual or projected rent. Do you want to do or would you qualify for a debt to income (DTI loan) which is how a conventional loan is structured? How much paperwork do you want to do and how many properties do you already have?

If you're at a 6.99%, waiting a bit longer might make sense but more information on your credit score and loan to value (LTV) would be helpful as rates vary based on the borrower's profile and the LTV.

More on DSCR loans and how the programs generally work. DSCR loans won't use your income to underwrite the loan. DSCR loans are based off of down payment (or LTV if a refinance), credit score and either actual or market rents so it helps to supercharge an investor's real estate goals and net worth. Here's a bit more in detail about how rates are calculated for DSCR loans:1. Credit score- the higher the best. 760-780+ generally gets best pricing for investment property loans with most lenders. From there every 20 point increment affect pricing differently. So for example, a 761 credit score will be in the 760-779 credit category, then going down to 740-759 and so on.

2. Loan to value ratio: The higher the loan to value ratio (LTV) is, pricing takes a hit. So your pricing will be higher for a 80% LTV loan than for a 60% LTV loan.3. Prepayment penalties- usually 1-5 year terms. The shorter the prepayment term has an impact on increasing the rate.4. Are you cash flowing the property? More on how that is calculated below. Is your DSCR ratio greater than 1-meaning are you cash flowing (according to the lender's criteria of mortgage, property taxes and insurance (and HOA) if applicable). Many lenders will not do a DSCR loan unless cash flowing. If they will do a loan with less than 1, the pricing takes a hit. This criteria is for 1-4 and 5-8 unit programs. I've included an example below to help illustrate this.So different lenders have different rates (which do vary even for DSCR loans) but these are factors they all consider.See example below:DSCR < 1Principal + Interest = $1,700Taxes = $350, Insurance = $100, Association Dues = $50Total PITIA = $2200Rent = $2000DSCR = Rent/PITIA = 2000/2200 = 0.91Since the DSCR is 0.91, we know the expenses are greater than the income of the property.DSCR >1Principal + Interest = $1,500Taxes = $250, Insurance = $100, Association Dues = $25Total PITIA = $1875 Rent = $2300DSCR = Rent/PITIA = 2300/1875 = 1.23

If a purchase, you also generally need reserves / savings to show you have 3-6 month payments of PITIA (principal / interest (mortgage payment), property taxes and insurance and HOA (if applicable). If a cash out refinance, many lenders will allow the cash out to satisfy the reserves requirement.

DSCR lenders generally let you vest either individually or as an LLC. It's a great way to increase your net worth and these loans can also be used to pull cash out of a property as it appreciates allowing you to reinvest money into new deals.

Happy to connect to discuss further.

Andrew Zamboroski · Answer

Elias has some weight to his point. More info will help better advise! Although I will say, 6.99% is still pretty decent compared to today’s par rates. Yes, you could be lower in DSCR but I doubt it will make sense unless you have a tangible benefit besides rate.

Is a refinance right for me right now?

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