Can a DSCR loan refinance another DSCR loan to gain equity or a lower interest rate

[Gregg Truex]

I am getting a DSCR loan to buy a STR. My question is if the first DSCR loan is 9% and 5 years from now the rates drop to some lower rate like 6% can I get a new DSCR loan at the 6% rate to replace the higher DSCR 9% loan? Or does the higher rate 9% DSCR loan have to stay in place until the property is sold. A second part of the question is can if I have a property as a DSCR loan for 5 years or longer can I pull equity out of the property by getting another DSCR loan to replace the original DSCR loan? I would love to talk to someone about the DSCR loans and how I can leverage them to build wealth in my STR journey. I will be buying 8 STR properties over the next 2 years. Thank you for your thoughts and help with my questions!

[Glen Friedman]

@Gregg Truex

Once you have a DSCR loan, it's just like any other mortgage (other than the usual 3-5 year prepay penalty).

You can refinance into another loan at any time. Be aware, the fees to refinance a DSCR loan could be anywhere from $5-10,000 depending on the lender, loan amount and fees so rates would have to drop a substantial amount to make it worthwhile.

Yes, you can pull out equity at any time but remember that most DSCR loans are capped at 70-75% loan to value (LTV) at the newly appraised value so again, the price appreciation would have to make it worthwhile.

Feel free to reach out if you have any questions.

Hope this helps,

Glen