Rental Property Refinance Help
Member since 2026 · 2 posts · 4 votes
I have a rental property that I am looking into refinancing. It is a duplex, and presently at 7.8% rate. I am hoping to lower my rate, and get some cash out. It is presently on conventional loan and title is on my name. I am looking at refinancing into DSCR or another conventional but looking to close on my LLC.
Estimated Property Value: $280,000
Present Mortgage Balance: $176,000
Credit Score: 675 - 690
Is there any possibility to lower this rate, and also get some cash out with little to no upfront cost ?
Anyone that could help should please let me know.
Hey, you definitely have some spread in the property, but there are a few things you need to keep in mind.
First, is the property actually going to appraise for $280K? That's going to be important.
Second, your credit score. If you're under 680, many DSCR outlets may limit you to around 65% leverage. Even under 700, you're typically looking at around 70%. I do have relationships with lenders that can potentially offer higher leverage, but you're going to pay for it in the interest rate.
At 70% LTV, you're looking at a $196K loan against your $176K balance. That's only $20K in equity before closing costs, so you may walk away with around $10K, depending on the fees.
If you want to refinance into your LLC, DSCR is likely going to be your best route. But here's where I'm going to shoot you straight: with your credit score sitting where it is, I wouldn't expect you to improve much on that 7.8% rate. You could very well end up in the 8s or higher, depending on the program.
Even on the conventional side, the numbers may not make sense for what you're trying to accomplish.
I'm a lender who believes in being upfront rather than wasting someone's time or money. Typically, you'll have an appraisal expense upfront, and other closing costs can often be structured into the loan if the numbers allow.
Could you potentially walk away with some cash? Absolutely, if everything lines up. But getting cash out, lowering your rate, and keeping upfront costs minimal all at once is going to be very difficult with this scenario.
I'd rather tell you that now than promise you something that doesn't make financial sense.
Curry, those three goals (lower rate, cash out, little cash at closing) rarely land on the same quote at 675–690. Rough math: you're at about 63% LTV today, and DSCR cash-out often caps around 70–75% in that score band, so maybe $20–34k gross before costs. Net can be thin. Closing in an LLC usually points to DSCR, which qualifies on rent covering the payment rather than your personal DTI. Rate-and-term prices better than cash-out, and "no upfront" usually means lender credits for a higher rate. The appraisal is still due before closing. Decide which goal matters most, get rents, taxes, and insurance ready, and compare quotes with and without a prepay penalty. If you want, DM me the rents and payoff and I'll tell you what this would typically qualify for on DSCR versus staying conventional in your name.
Curry, the STR detail you dropped changes this more than anything else in the thread, so let me take a swing at it.
$5,000 to $6,000 a month on a duplex worth $280k is a strong number. The good news is DSCR is not your problem here. Say a lender sizes you at 75% of value, so $210k. At 8% on a 30 year that's about $1,540 a month in principal and interest. I don't know your taxes and insurance so I'm gonna guess $600ish a month combined (STR insurance runs higher, so check that). Call it $2,140 all in. Now take your $5,000 and knock it down 20% because a lot of lenders haircut short term rental income, and you're at $4,000. That's a DSCR around 1.85. Most lenders want 1.0 to 1.25. You clear it easy.
The catch is that not every DSCR lender does STR, and the ones that do want to see 12 months of booking history (your 1099K and the Airbnb statements) or they'll use an AirDNA style projection. Ask that question FIRST before anyone pulls you credit.
Here's the part I'd really sit on though. You're at 7.5% with a local bank, and your score is gonna price you around 8 on a cash out. So roughly, interest on $176k at 7.5% is $13,200 a year. Interest on $210k at 8% is $16,800. You're paying about $3,600 a year more to get maybe $24k in your pocket after costs. That's kinda like borrowing that $24k at 15%. Not terrible if it buys the next deal. Pretty bad if it's just to move title into the LLC.
If the LLC is for liability, call your local bank first. GSB already knows this property and some community banks will lend to an LLC on a commercial note. Might be the cheapest path.
I'm a lender, fwiw, and we do DSCR. What's the cash for?