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DSCR Loan Florida Refinance
The Debt Service Coverage Ratio is a ratio of a property’s annual net operating income and its annual mortgage debt, including principal and interest. Lenders use DSCR to analyze how much of a loan can be supported by the income coming from the property as well as to determine how much income coverage there will be at a specific loan amount.
What Are the Requirements?
- Must be an Investment Property
- Minimum credit score 660
- Maximum of 75% loan to value for Rate/Term Refinances
- Maximum of 70% for Cash-out Refinances
- Maximum of 65% for Condotel Refinances
- Borrower must own a primary residence
What is the appeal of a DSCR loan?
One of the big benefits of a DSCR loan is that a personal income Is not required. We are interested in the cash flow the subject property is calculated to generate.
Fidelity Home Group Florida DSCR Loan features:
- No leases are required to be listed
- No lease required if not rented
- No limit on total number of properties
- Maximum loan amount $5 million
- No personal income used to qualify
- Qualifications based on property cash flow
- Condotels and Non-Warrantable Condos are eligible
- 40 year fixed interest only available
- Properties can be in LLC’s name
- Minimum Debt Service Coverage Ratio of 1%
Take Cash Out
Refinancing your mortgage is a great way to use the equity you have in your investment property. With a cash-out refinance, you refinance for a higher loan amount than what you owe and pocket the difference. Any proceeds you receive are tax-free.
Many homeowners use cash from their home to pay off high-interest credit card debt and student loan debt. You can also take cash out to finance home improvements, education or whatever you need. Since mortgage interest rates are typically lower than interest rates on other debts, a cash-out refinance can be a great way to consolidate or pay off debt. Additionally, mortgage interest is tax-deductible, but the interest on other debts usually isn’t.
You may be able to take cash from your home if you’ve been paying on the loan long enough to build equity. Additionally, you may be able to do a cash-out refinance if your property value has increased; a higher value on your home means your lender can give you more money to finance it.
Get a Lower Monthly Payment
A lower mortgage payment means more room in your budget for other things. There are a few ways you can lower your payment by refinancing.
First, you may be able to refinance with a lower rate. If rates now are lower than they were when you bought your home, it’s worth talking to your lender to see what your interest rate could be. Getting a lower rate means lowering the interest portion of your monthly payment – and big interest savings in the long run.
Second, you could refinance to get rid of mortgage insurance – a monthly fee you pay to protect your lender in the event that you default on the loan. Mortgage insurance is usually only required when you put down less than 20%. You could save hundreds of dollars a month by refinancing to stop paying monthly mortgage insurance.
Third, you can get a lower payment by changing your mortgage term. Lengthening your term stretches out your payments over more years, which makes each payment smaller.
There may be other ways you can get a lower payment, so it’s always worth checking with your lender to see how they can help you get a payment that fits your current budget.
Shorten Your Mortgage Term
Shortening your mortgage term is a great way to save money on interest. Often, shortening your term means you’ll receive a better interest rate. A better interest rate and fewer years of payments mean big interest savings in the long run.
So how does this work? Let’s look at an example. Say your loan amount is $200,000. If you got a 30-year loan with a 3.5% interest rate, you would pay approximately $123,000 in interest over the life of the loan. However, if you cut your term in half, you would pay about $57,000 in interest over the life of the loan. That’s a difference of $66,000 – and it doesn’t even account for the fact that the shorter term would provide you with a lower interest rate (and more savings).
An important thing to know about shortening your term is that it may increase your monthly mortgage payment. However, less of your payment will go toward interest, and more of it will go toward paying down your loan balance. This allows you to build equity and pay off your home faster.