Daily Mortgage Rates LIVE - 09/16/2024 - DSCR Loans

In this episode of Daily Mortgage Rates LIVE!, we dive deep into DSCR Loans—Debt Service Coverage Ratio Loans. Join us as we explore what DSCR Loans are, how they differ from traditional mortgage loans, and why they’re gaining traction in today’s real estate market.

We’ll cover the fundamentals of DSCR Loans, including their benefits for investors and property owners, and provide tips for qualifying and applying for them. Get insights from industry experts on current trends and future outlooks to help you make informed decisions. Whether you're a seasoned investor or new to real estate financing, this episode offers valuable information to guide your next investment strategy.

Tune in for expert advice and actionable tips on navigating the DSCR Loan landscape!

For more episodes visit: https://themortgagecalculator.com/Page/Daily-Mortgage-Rates-LIVE-Video-Podcast

About The Mortgage Calculator:

The Mortgage Calculator is a licensed Mortgage Lender (NMLS #2377459) that specializes in using technology to enable borrowers to access Conventional, FHA, VA, and USDA Programs, as well as over 5,000 Non-QM mortgage loan programs using alternative income documentation! 

Using The Mortgage Calculator proprietary technology, borrowers can instantly price and quote thousands of mortgage loan programs in just a few clicks. The Mortgage Calculator technology also enables borrowers to instantly complete a full loan application and upload documents to our AI powered software to get qualified in just minutes!

Our team of over 350 licensed Mortgage Loan Originators can assist our customers with Conventional, FHA, VA and USDA mortgages as well as access thousands of mortgage programs using Alternative Income Documentation such as Bank Statement Mortgages, P&L Mortgages, Asset Based Mortgage Programs, No Ratio CDFI Loan Programs, DSCR Investor Mortgages,

Catch all the episodes of Daily Mortgage Rates LIVE at https://themortgagecalculator.com/Page/Daily-Mortgage-Rates-LIVE-Video-Podcast

Check out all episodes of Daily Mortgage Rates LIVE at https://themortgagecalculator.com/Page/Daily-Mortgage-Rates-LIVE-Video-Podcast

The Mortgage Calculator is a licensed Mortgage Lender (NMLS #2377459) that specializes in using technology to enable borrowers to access Conventional, FHA, VA and USDA Programs, as well as over 5,000 Non-QM mortgage loan programs using alternative income documentation! Non QM Loans include Bank Statement Mortgages, P&L Mortgages, Asset Based Mortgage Programs, No Ratio CDFI Loan Programs, DSCR Investor Mortgages, Commercial Mortgages, Fix and Flip Mortgages and thousands more!

To apply for a mortgage please visit our Quick Mortgage Quote Page at https://themortgagecalculator.com/Mortgage/QuickQuote

The Mortgage Calculator is a registered DBA of Mortgage Calculator Company LLC. NMLS ID #2377459. Programs and rates are subject to change without notice. Mortgage Calculator Company LLC is licensed in the following states that require specific licensing disclosures: AZ (#1040352), CA CFL (60DBO-171188), GA Georgia Residential Mortgage Licensee (#2377459), IL MB.6761755 Illinois Department of Financial and Professional Regulation, Division of Banking, 100 West Randolph, 9th Floor, Chicago, IL 60601 1-888-473-4858. Not licensed or conducting business in New York.

For more info visit https://themortgagecalculator.com...

Transcript

Restream recording Sep 16, 2024 • 03:03:22 PM: 0:09

So, welcome everyone. My name is Kyle Hiersche. I'm the COO of The Mortgage Calculator, CSO, Jose Gonzalez. Thanks We are a lender that specializes in non QM loans. And what we do every weekday at 11 a. m. Eastern on this show is go through our actual live mortgage rates for a few different standard loan programs. And then we do a deep dive into different loan topic. Today's topic is our favorite type of loan at the mortgage calculator, which is DSCR. So Jose, we'll talk about that here shortly, but first let's pull up the rates. So Nick, if you're ready, let's see what the rates are looking like today. All right. As, uh, has been the case. For the last while, good news for rates recently, and we have a big meeting coming up here. So hopefully it continues to drop. We will check out the rates for today. It is September 16th, just after 11 a. m. So all of our standard programs have their initial rate sheets for today, and we will compare the APR across the program. If you'd like a full breakdown of the itemized fees that go into the APR there, the itemized loan estimate, please get with one of our team members. They would be happy to help you out. For the demo, we set a standard scenario. We set a single family home, 500, 000 purchase price, 400, 000 loan amount that corresponds to 80 percent loan, 20 percent down payment. And we set an estimated 765 bill credit score and estimated 40 percent debt to income ratio. Some of those settings. Let me share the rates for today. Pretty amazing here as we continue to see everything go down. First up, our 30 year fixed conventional option for a primary home. This is the most common option people think of when they think of a mortgage. Rates as low as 5. 65 today. Final APR 5. 891. And if for any reason our customer doesn't qualify for standard conventional option, typically the next option you want to compare is an FHA option. FHA allows our leniency on credit issues. And a higher overall debt to income ratio. FHA comes in today at 4. 75, right? And a final APR with the upfront and yearly mortgage insurance, 5. 676. So if our customer qualifies for both, FHA could be a touch cheaper if they're willing to do the mortgage insurance. And our customers that need to use it, definitely a good option. Now moving on to va, VA is only for eligible active service members and vets. If our, uh, borrowers are eligible, these programs are amazing. Rates as low as 4.99 final a PR with a standard funding fee there, 5.264. So if our customers qualify for a VA option, definitely when you compare the a PR better than FHA or conventional. So great option for our vets. And the final option here for standard programs that any banker, lender has, USDA. Those are only for properties in USDA eligible areas if the property's eligible and our borrower's eligible. These are great options to look at coming in today, 4.875 final a PR 5.575 with all of the standard fees there. So we'll compare that to FHA. Typically, our borrowers will be, uh, looking at the comparison here, and USD is gonna be a touch cheaper and if they compare it to conventional, USDA is gonna be a touch cheaper as well. And that rounds out our standard options that any bank or lender has, and if our customer doesn't qualify, they may have to deny them. But we have 5, 000 other options here, starting with our non QM AltDoc options. So if the customer doesn't quite qualify for a conventional option with two years of tax returns and needs to use alternative documentation, you can switch here to our non QM AltDoc option using bank statements, 1099s, P& Ls, all kinds of different options. The lowest rate option here today for a primary home, 6 percent rate, is probably a bank statement option most likely. I like our 6. 309. So, as usual, we're within about a half a point to switch from conventional to Xenalt Dock. So, great option for our borrowers that need to use it and still get that home they really want. And we can also use alternative dock programs for investment properties and tons of options come up for investments. This is a bank statement or similar, 6. 5 rate, final APR 6. 823. Not much movement since last week on that, but hopefully we see some more this week. And we'll compare the other investment property options. We have our standard 30 year fixed conventional option. Remember there are no government options, so no USDA, VA, or FHA, but we have our standard conventional for investment 6. 25 right today. Final APR, 6. 581. So great option there, beating the AltDoc, but not quite beating our favorite options and our topic for today actually, DSCR. So DSCR stands for Debt Service Coverage Ratio, no income needed, no employment information needed from the borrower. We simply use the estimated rents from the appraisal to determine a DSCR ratio. The estimated rents can cover the estimated expenses, aka the property cash flows monthly. That is a DSCR ratio of one or higher, which is preferred. For these demos, I typed in a 1.5 so we can see all the programs and Jose's deep dive will have some different options pop up here later. So first up is our standard three year prepayment penalty option, which is pretty common for DSCR coming in at 6.258. Finally, we are 6.529 touch cheaper than conventional, but we have a smoking option here when we add a five year prepayment penalty to some of our programs. Rates come down to 5. 875, final APR is 6. 181, so absolutely amazing there for our investors feeding conventional, which is awesome. And the final DSCR is a no prepayment penalty option, so some states don't allow it and some investors prefer not to have one, no problem. Rates as low as 6. 5, final APR is 6. 823, so that's a touch higher than conventional. Definitely recommend our investors add a prepayment penalty to make it a little better, but this option does exist. And our final two demos here, not much movement since last week, but our 30 year fixed second mortgages. So these are very popular as, uh, HELOCs are typically the only option for borrowers who want to keep their first mortgage and get some cash out with the second mortgage. Now we have our 30 year fixed option, uh, which is different than a HELOC because it's not variable and much lower rates. So for our primary home, we can get cash out rates as low as 8. 125 using that second mortgage. I'm likely our 8. 527. And for an investment property, we can do the same. HELOCs are very rare for investments. Rates as low as 9. 5. I like our 9. 769. And these are lower rates than HELOCs and non QM programs. So we can use bank statements and similar. So those are our standard options. But let's get into our topic for today Uh dscr loans again our favorite loans, uh thousands of different options and combinations when we get into dscr loans Unfortunately, I can't display those all on this simple quick pricer So we have jose here to break down some of the various options we have under dscr all kinds of options I'd say there's, uh, at least 2, 000 combinations of DSCR, uh, possibly more, uh, that we can do. So, Jose's just, uh, showing the tip of the iceberg here. Definitely some great options for everybody. Good morning, everybody. Thank you for joining us for daily mortgage rates live with the mortgage calculator. First, for those of you that may not be aware, DSCR stands for debt service coverage ratio, and that is a calculation of getting the monthly rent, right? Gross monthly rent without any deductions divided by the complete housing expense, principal, interest taxes, and insurance. And if any HOA, then obviously at the HOA fee. And that is your debt service coverage ratio. The best options are available for a DSCR Uh, 1. 0 or above and we actually have 1. 25 and above and 1. 5 and above as different tiers, but definitely 1. 0 to, um, get either the 85 percent LTV option that I'm going to share for you or any of the, uh, or the 80 percent option as well. Anytime you drop below 1. 0, the DSC, uh, the loan to value is going to drop to 75 percent for the purchase. So, let's go ahead and share the examples I have for you today. Our first example is with, uh, 15 percent down. Now, this used to be the unicorn for the investors, uh, not in the too far off past. Uh, but now we do have multiple options, uh, for the 15 percent down option, even, uh, uh, one, uh, two to four unit option before it was limited to only one unit. Now, what is still not possible with 15 percent down is short term rental. If you're actually using the rental to qualify. 8. 124 is our lowest cost option at par, which is absolutely amazing considering this program not too long ago was in the 10 percent range and 6. 749 is our lowest rate. Option for our 15 percent down DSCR purchase now with 20 percent down, uh, you see how much better the rate go, the rates get. And in this scenario here, I only used a 1. 0 DSCR. The DSCR is higher than that. The rate will be better. So here's 6. 75 actually with a lender credit as their lowest cost option and 6. 25 is our lowest cost option. 6. 75 lowest. Cost options, excuse me, 6. 25 loads rate option. Now, AirDNA for our short term rental owners out there or short term rental property purchasers when actually using short term rental, right? Uh, so here we are at an 80 percent LTB. Uh, the only, um, Restriction on this program, if you're using AirDNA in this particular option, is that you, your um, DSCR does have to be at 1. 5 or above, but no LTV reduction, if you're at 1. 5 or above, which is critical. 6. 625 is our lowest cost option at PAR. 5. 75 lowest rate cost. Option now, uh, for the DSCR less than one, I didn't mention, uh, mentioned that that would affect your LTV. So you're at 75 percent LTV. This option is for a debt service coverage ratio of 0. 75 to 0. 99. Meaning again, you are less than 1. 0 meaning that, uh, when doing your division there, your calculation, the, uh, rent will not cover 100%. of the housing expense, but 25 percent down gets you in at 7. 49 is your lowest cost option at par, which is absolutely amazing. Considering you can go to 6. 125 as your lowest rate option, and you are not even at a hundred percent. covering the housing expense. So that is amazing. And it gets better. Here is for a debt service coverage ratio, less than 0. 75. So theoretically this would be from zero to 0. 74 DSER, even though I don't think there's ever going to be a zero DSER. Uh, property is always going to be able to rent for something. And our lowest rate option is 8. 499 at par. And our lowest cost option, excuse me, lowest rate option 6. 99 and lowest cost option was the 8. 499. And our last option here is for our low credit score borrowers. This is the minimum credit score possible for a DSCR loan, 575. Now this was available up to 65 percent LTV, but they just recently reduced it. to 60 percent LTV, but still a great option considering this is not a bridge loan. This is not, uh, you know, any kind of a short term balloon loan or anything like that, this is a full term 30 year advertising loan, 10. 375 is the rate. And it comes at a cost of one point. And our last option here to share with you is a DSCR cash out 75% LTV. 6. 625 is our lowest cost option. 5. 625 lowest rate option for our DSCR cash out. 75 percent LTV. So look to the mortgage calculator for all your DSCR loans, non QM and everything else under the sun. All right. Thank you, Jose. It looks like we do have a question in here. If you do have any questions, feel free to put them in the chat, but we do have one here we can pull up and answer. The question is typically how much prior experience would we be looking at for the 15 percent down DSCR? Uh, I don't believe that that program, the, the one I was looking at, uh, requires, uh, investor experience. We'd have to check because those guidelines do change all the time, but they definitely are not for a first time home and definitely tell you that you have to at least, uh, have a, uh, primary residence under their belts. All right, great question. Thank you. Okay. I don't see any other questions. So I think we can go ahead and wrap it up here Remember that we do this at 11 a. m Eastern every weekday where we go through the live rates and then do a deep dive into a different topic So we will see you all tomorrow at 11 a. m Eastern with a new topic for daily rates live with the mortgage calculator