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Let’s face it there are a myriad of options when it comes to financing investment properties. Hard money, commercial financing, DSCR, private money, and many more. With each option there are pro’s and con’s along with the nuances that come with each financing option. For now, let’s focus on DSCR or Debt Service Coverage Ratio lending. Unlike commercial financing, a DSCR lender is only concerned that the investment property can generate enough cash flow to service the principal, interest, taxes, and insurance or (PITI). The lender is making a loan based on the property’s ability to cash flow rather than underwriting the individual borrower and evaluating their income in relation to their overall debts. DSCR loans are a great option for individuals that do not show income on their tax return, those with high debt ratios, self-employed individuals, and very aggressive real estate investors. Typically, DSCR loans offer a fixed interest rate with a 30 year term and amortization.
DSCR loans offer ease of access but still have qualification guidelines.
DSCR loans are by far the easiest way for real estate investors to access capital. With that said investors should be aware that they are applying for a loan and each lender will have their own minimum standards for things like: credit score, mortgage history, source of funds, property seasoning, bankruptcies, payment history, etc. Its important to discuss minimum standards with your lender and inform them of any adverse credit history before applying.
Highlights:
· Fixed Rate
· 30 year term and amortization
· No personal income validation
· No evaluation of debt obligations
· Minimum credit score 660
Focus DSCR
If your interested in a DSCR loan you can give us a call and speak with one of our loan officers today 614-362-8701 or request a quote online.
Disclaimer: Not Financial or Investing Advice
The information provided in this blog article is intended for general informational purposes only and should not be considered as financial or investing advice. The content of this article is based on the author's personal opinions and research, and it is not intended to provide specific financial or investment recommendations.
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