All Forum Posts by: Brandon Beardt

Hi Michelle,

Sorry to hear that you're having to go through with this towards the last stage of the process. It sounds like paying 1 point to buy down the interest rate would be your best bet in order to meet the DSCR, as it seems the most cost effective strategy for your goal (keep as much cash in the bank). If you really think about it, it's either $2,600 out of your pocket to the lender or $9,750 back in your pocket, but as equity. Hope that makes sense. When it boils down to tight ratio's on purchases like this, I always double check the taxes and make sure that the estimated annual amount is correct. This could lead to over estimated monthly taxes and hurt the DSCR ratio. Verify the actual tax rate for the property (Current assessed value/current annual tax amt) and multiply it by the new purchase price (since this will be the new assessed value). That should give you the new annual tax amount. Your broker should be able to do this themselves to confirm. Not sure if it'll help in this situation necessarily, but definitely something to look into since every dollar counts!

 Hi Michelle,

Sorry to hear that you're having to go through with this towards the last stage of the process. It sounds like paying 1 point to buy down the interest rate would be your best bet in order to meet the DSCR, as it seems the most cost effective strategy for your goal (keep as much cash in the bank). If you really think about it, it's either $2,600 out of your pocket to the lender or $9,750 back in your pocket, but as equity. Hope that makes sense. When it boils down to tight ratio's on purchases like this, I always double check the taxes and make sure that the estimated annual amount is correct. This could lead to over estimated monthly taxes and hurt the DSCR ratio. Verify the actual tax rate for the property (Current assessed value/current annual tax amt) and multiply it by the new purchase price (since this will be the new assessed value). That should give you the new annual tax amount. Your broker should be able to do this themselves to confirm. Not sure if it'll help in this situation necessarily, but definitely something to look into since every dollar counts!

DSCR stands for debt service coverage ratio. Lenders want to see this ratio be at least equal to or greater than 1. They determine this by looking at the current monthly rental income and the projected monthly principal, interest, taxes, and insurance payment. If the monthly rent exceeds the monthly payment, the property's good to go.

 Hi Dan,

First off, congrats! That's awesome to hear that your expanding your RE investment portfolio. From my experience on the financing side, DSCR loans are easy to structure and have a straight forward process. Quite literally, if the rental income is equal to or greater than the PITI, it'll qualify (with some exceptions of course). 75% LTV is typical, but I have worked with lenders willing to do 80%. I usually advise against it as it could lower the DSCR too much though. I'd recommend shopping around with different lenders so you have a general idea/feel about what to expect in terms of rates and the whole process itself. You can expect rates to START in the mid to high 6's. If you'd like to discuss this scenario or any other scenario with me, don't hesitate to reach out! Always happy to help. :)

Like Stephanie said, there are many factors that go into rates. It all depends on the loan scenario. I'm seeing rates for DSCR loans starting in the mid 6's as well. If you think rates will go down soon, consider buying down the prepay so you can refinance earlier. If you think rates will continue to rise, consider buying down the rate itself. Keep shopping and good luck! :)

Hi Andre, you can do a portfolio loan based on DSCR for your rentals, assuming that it's cash flowing. That way you wouldn't have to provide any income verification documentation (like W2's, paystubs, tax returns, etc). As long as the rental income is greater than the PITI payment, you'd be able to qualify (with some exceptions of course). Max leverage is usually around 75% if you're looking for cash out. You also have the option of doing separate DSCR loans for each rental. However, it'd be smart to go through the scenarios side by side and compare the pro's, cons, and cost of either option. IF the property is able to cash flow, DSCR financing seems like your best bet. I hope this helps in someway shape or form. If you have any questions regarding this kind of financing, don't hesitate to reach out! :) Always here to help.

 Hi Baird,

My email is [email protected] - thank you!!

 Hi Baird,

Can you please add me to the email list for future events? I'm moving up there in about a month or so and would like to join!

 Hi Tony,

Since you've hit the conventional mortgage loan cap, NonQM financing may be your next best bet. This type of financing includes programs such as DSCR or bank statement programs. As of late, DSCR has been extremely popular with RE investors as the qualification is much easier (no need to see any sort of income verification docs). Basically, if the Rents are greater than the PITI, you qualify. We work with quite a few different NonQM lenders and are very well versed in what they require/are willing to lend on. Hope this helps in someway! If you have any questions, don't hesitate to reach out.

That's great! Glad to hear you got approved. Non-QM loans allow you to qualify based on other alternatives instead of the traditional DTI method ((DSCR for example when the monthly rents > monthly PITI (principal, interest, taxes, insurance) = you qualify)). Pro's include different qualification methods if you have trouble qualifying conventionally or just don't want to go down that road and provide all the docs needed for conventional financing. For DSCR, for example, you wouldn't need to provide any sort of income documentation, just need to make sure the market rent > PITI. There are also different term options, such as interest only or 40 year fixed, but usually the 30 year fixed makes the most sense. Some cons include that the rate is a tad higher and that there are prepayment penalties.