When effectively overseen, Rental Property yields a positive Cash Flow and opting to invest in Rental Property is considered to be one of the most secure and stable investment strategies of our time. Over the long term, the values of Rental Property consistently exhibit an upward trend, making them a reliable asset for an Investor at any level. Notably, Rental Properties demonstrate more resilience than traditional investments such as stocks, mutual funds, or foreign currencies. Even during periods of decline, Rental Property values have the inherent capability to rebound over time, showcasing their enduring strength and potential for long-term growth.
For Rental Properties that you have owned for at least 6 Months, you will get up to 80% of the Current Value of the Property for “Rate and Term” style Loans and up to 75% of the Current Value for a “Cash-Out” Refinance Loan. The terms are substantially less if you have owned the Property for less than 6 Months. Refinance Loans provide versatility by presenting choices between a 30-year Fixed-Rate Mortgage and an Adjustable-Rate Mortgage (ARM) with configurations like 5/1, 7/1, and 10/1. And if you don’t understand the ARM configurations, the first number indicates the fixed-rate period in years, while the second number denotes the frequency of interest rate adjustments per year following that initial fixed period.
WHAT IS DSCR?
DSCR, or Debt Service Coverage Ratio, assesses a property’s capability to meet its debt obligations. In simple terms, it represents the Property’s “Cash Flow.” In the case of a Residential Property, DSCR (Cash Flow) is computed by dividing the Rental Income by the annual Principal, Interest, Taxes, Insurance, and Association (PITIA). The resulting DSCR value indicates how many times the property’s income covers its debt commitments. A DSCR of 1.2 signifies that the property’s income is 1.2 times greater than its debt obligations, indicating a healthy level of coverage, while a value below 1 suggests a potential financial strain. DSCR serves as a crucial factor in evaluating the risk associated with a loan.
The formula for Residential Property DSCR is: DSCR = Rental Income / PITIA
REFINANCE LOAN HIGHLIGHTS:
GENERAL GUIDELINES:
• Min 660 FICO (<660 on a case by case basis)
• Choose 5-4-3-2-1 “Step Down” Pre Pay or No prepayment penalty
• No Income verification on DSCR Programs
• Interest Only option available
• Up to 80% LTV for “Rate and Term”
• Up to 75% LTV for Cash Out Refinances
• Experience not necessary
• Foreign National Programs available
• Loan Amounts as low as $50,000
• Interest Rate as Low as 6.49