Daily Mortgage Rates LIVE - 10/08/2024 - Low and No Ratio DSCR Loans

In this episode of "Daily Mortgage Rates LIVE," we’re diving into the world of Low and No Ratio DSCR Loans—an innovative approach to real estate financing designed specifically for savvy investors.

Whether you’re an experienced real estate investor looking for more flexibility or just starting out, Low and No Ratio DSCR (Debt Service Coverage Ratio) Loans could be the game-changer you've been searching for. These loan options provide opportunities for borrowers who might not qualify under traditional DSCR requirements, making them a valuable tool for expanding your investment portfolio.

🔍 What makes Low and No Ratio DSCR Loans different from standard DSCR loans?
💸 Who can benefit the most from these loans, and what’s the catch?
📊 What are the key risks and rewards, and how can you make these loans work to your advantage?

Join our expert hosts as they explore how Low and No Ratio DSCR Loans allow for flexible underwriting, providing a unique opportunity for investors to qualify without the usual income hurdles. You’ll learn about the advantages, the risks, and when these loan options are the ideal fit for your real estate strategy.

If you're eager to explore creative financing strategies that can help grow your investment portfolio, this episode is a must-listen. Tune in to "Daily Mortgage Rates LIVE" and get ahead in the evolving landscape of real estate financing with insights that could help you take your next big step. Don’t miss out—subscribe and join us for this insightful discussion!

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

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 Oct 08, 2024 • 03:03:53 PM: 0:09

All right. So welcome everyone. My name is Kyle Hiersche I'm the coo of the mortgage calculator joined here by our president of Nick Hiersche our cso jose gonzalez. We are a lender that specializes in non QM loans. And what we do every weekday on the show at 11 a. m. Eastern is go through our actual live mortgage rates. And then we do a deep dive into a different loan type. Today's loan type is our favorite loan type, which is DSCR loans. And Jose is going to give us some cool low and no ratio options, which are absolutely mind blowing. So before we do that though, we will go through our rates. So Nick, if you're ready, let's go ahead and pull up today's rates and let's see what the market is looking like this morning. Right. So we will compare all our programs here for today. It is October 8th, just after 11 a. m. Eastern. Not so great news for rates, but we're still at one year lows, remember. Uh, we will set up a basic scenario and compare the APR across the programs. If you'd like a full itemized loan to submit that itemizes all the fees that go to the APR, please get with our team. They'd be happy to send that over. For the demo today, as we do every day, we'll set up a basic scenario, a single family home, 500, 000 purchase, 400, 000 loan amount that corresponds to 80 percent loan to value, 20 percent down payment. We use an estimated 760 FICO credit score and an estimated 40 percent to income ratio. Some of those settings, let's make the rates nice and big here. All right, first up is our 30 year fix conventional for a primary home. Typically, the most common option people think of when they think of a mortgage. Rates of the list 6. 124 today. Final APR 6. 439. And if for any reason our customer doesn't qualify for a standard conventional, we typically want to quote an FHA to compare. FHA allows more leniency on credit issues and a higher overall debt to income ratio, but does require upfront and yearly mortgage insurance. Rates for FHA today, 5. 25, final APR 6. 193 with all of the fees and mortgage insurance included. So if our customer qualifies for both, they may consider FHA if they want to do the mortgage insurance. The customers that need to use it, definitely a good option. And our VA options are only for our eligible vets and active service members. These are great programs if you're eligible. Great as well as 5. 5 final APR 5. 798 standard funding fee. So if our customer qualifies for VA, definitely going to be better option than FHA or conventional. So great option for eligible borrowers. And the final option that every banker lender has USDA for those properties in USDA eligible areas, those rural areas of the country. USDA comes in today at 5. 25 final APR 5. 996. So if our customer and the property qualifies and they're going to compare against an FHA USDA is going to be a touch cheaper and a touch cheaper than conventional as well. So good option for those rural properties and that rounds out the standard options every banker lender has. If our customer doesn't qualify, many banks would have to deny them, but we have 5, 000 other options starting with our non QM alt doc. For a primary home. So if our borrower doesn't quite qualify using tax returns and standard documentation for conventional FHA, et cetera, we need to switch to alternative docs, such as bank statements, 10 99s, uh, P and L all kinds of different options that we have. We can do that here for almost identical cost today. Absolutely amazing. 6. 125 rate and a final APR of 6. 450, almost identical to conventional, um, which is pretty amazing for our customers to switch to all docs for relatively the same price. And we have our investment option for Altdocs as well, and tons of other investment options. Bank statement or similar comes in today, 6. 875, Final APR 7. 222, and we'll compare that to our conventional and other investment options. So we do have conventional, we do not have government, so no VA, FHA, or USDA, but the conventional programs do allow investment properties, rates as low as 6. 75, Final APR 7. 083. A little better than the AltDoc option, but not better than our favorite options, our DSCR program, Smoking Conventional, again, DSCR stands for Debt Service Coverage Ratio, no income information needed, no employment information needed from our borrowers. We simply use estimated rents from the appraisal to determine a DSCR value. If the estimated rents can cover the estimated expenses, the property will cash flow. That's a ratio of one or higher. Which is preferred and with a three year prepayment penalty, our DSCR program comes in 6. 375, finally PR 6. 682, beating conventional, amazing, and we can even sweeten the deal with a five year prepayment penalty, it drops it a little bit, 6. 258, finally PR 6. 553, and we do have a no prepayment penalty option since some states don't allow it and some investors prefer not to have one, rates today, 6. 75 finally PR 7. 222. So that's a touch higher than conventional. I'd still say a hundred percent of investors would prefer a DSCR option. So if they prefer no prepay, this is the option, or you can add a prepayment and sweeten the deal quite a bit. And the final two demos we always do are 30 year fixed second mortgages to allow our customers to access their equity without touching their first mortgage. So many customers have a first mortgage that has lower rates than what we can offer now. and need some cash out. So we can do that with either a HELOC or a fixed rate second mortgage, which is the new option here. Fixed rate second mortgage for primary coming in at 8. 125. Lower rates than a HELOC and obviously fixed rates as opposed to variable. Finally PR 8. 542. And the same option to get cash out of an investment property using a second mortgage rates as low as 9. 375. Definitely lower than HELOC and HELOCs are very rare for investment properties. And if I like our 9. 731. So those are our live demos we do every day. But let's get into our special topic today. Something we don't get to do on the live pricer. It is a little bit, uh, rare to have a low or no ratio for a DSCR loan. So, Jose is going to go into the specific examples for that. This would be where a property, as I mentioned, uh, typically the options we quote on the live pricer are properties that cash flow above one ratio, which is preferred, so all the programmers will pop up. Jose is going to go over the rare times where the property doesn't cash flow and it's an under one ratio, doesn't quite cover the expenses and we can still do the loan, but there are caveats here. So Jose, let's explain what we're talking about and then check out some live rates. Good morning, everybody. Thank you for joining us for Daily Mortgage Race Live with the Mortgage Calculator. Yes, the low ratio and especially, like we like to call it, the no ratio. I mean, you can call it what you want. We call the low ratio the one that's 0. 75 to 0. 99 DSCR and the no ratio the one that is less than 0. 75. And anyway, you look at it products when you tell the investor, yes, we can close that loan. Just like I told one of my investors the other day, cashing out his free and clear property, putting 210, 000 in his pocket on a property that is currently at about a 0. 76 DSCR, uh, at that loan amount, which is amazing. Customer is so happy. Didn't think it was going to be possible. Because his rent is a little low compared to what he wants to get. But, that is the beauty of the low and no ratio option, right? Uh, this is one that we use all the time also for our short term rental properties. When we don't have short term rental comps for whatever reason, AirDNA doesn't have any suitable comps, we can always go up to a 75%. on the purchase of the low ratio. So let's get right into the options here. Very exciting because most people don't know this exists, uh, especially, uh, some of the extra special options I'm going to share with you now. So our first option here is for the low ratio, 0. 75 to 0. 99 debt service coverage ratio. Remember we are dividing the housing expense into the gross rent, uh, from the property. In this case, it doesn't cover on a one-to-one basis. Maximum LTV on this product is 75%, so we are looking at 25% down minimum down payment and look at those rates. This is not a typo. This is for a low ratio where we are at 7.49 at par. And we can buy that down all the way to 6. 25, previously unheard of numbers for this low ratio product that in the not too far off past, uh, was approaching 10 percent on the rates and now we're 7. 49 at par. So now for our no ratio option. This is where the debt service coverage ratio is less than 75. Our maximum LTV on this option is 70%, so minimum down payment is 30%. This one, theoretically, can have a debt service coverage ratio of 0. 8. 874%, lowest cost option at par. And you can buy that down all the way to 7. 374 at a cost of 3. 225 points. And now I did mention to you, I was going to have some extra special treats for you. I bet you didn't know that even at a 70 percent LTV, we could go down to a 640. 640 minimum credit score still attained 70 percent LTV and still be between nine DSCR. And on top of that great rates to boot, right? 8. 75 is our lowest cost option at par. And you can buy that down all the way to 7. 25 percent for our no. excuse me, low, not no low ratio 0. 75 to 70 percent LTV, which is great. So now for some cash out options, yes, believe it or not. They even let us do cash out refines with these low and no ratio options. Our low ratio option here, uh, 0. 75 to 0. 99 cash out is maximum 70 percent LTV. And 7.625 is our lowest cost option at par, and you can buy that down all the way to 6.375% again, that is amazing. And now for our no ratio, remember this is the one less than 0.75. So theoretically you gonna have A-D-S-E-R of 0.1 and still qualify for this program. 8.875% is our lowest cost option at par. Zero points, and you can buy that down all the way to 7.875 at a cost of 3.225 points at our for our maximum, 70% LTV point less than 0.75, no ratio. DSER cashout, and our last option here. Again, the low credit score option, uh, minimum credit score of 640 for this option. This is our low ratio 0. cash out with a minimum 640 credit score can still attain 65 percent LTV and I'm sure this is music to some ears out there and I'm sure We will be getting reached out to 8. 999 actually with a lender credit of 0. 025 points. And you can buy that down all the way to 7.499 for a cost of 3.475 points. So some amazing low and no ratio options here. Remember, these are also great alternatives for your short term rental properties when you don't have any type of short-term rental comps. So do look to the mortgage calculator for all your low, no ratio TSCR code. All right. Thank you, Jose. I don't see any questions coming in here, but definitely amazing programs. You're telling me I can have a property that it doesn't cash flow and doesn't only makes half the rent to cover the expenses that I can still get a loan for it, Jose? Absolutely. As the equity in your credit meets the minimum credit requirements. You're good to go. And it's a loan that's based on the cash flow of the property and the property is not cash flowing, right? Well, at that time, I guess they're banking on your credit as well. And the equity, you know, the, the LTV obviously is a little bit lower, so they're feeling positive about that. But yes, A program based on the cash flow of the property that will give you the loan without any cash flow It's pretty cool Okay, cool. Well, I don't see any questions. So we'll go ahead and wrap it up Remember that we do this at 11 a. m Eastern every weekday where we go through our live rates and then do a deep dive into a different loan type So we'll have some cool new loan types for you to go over tomorrow. Thank you everybody for tuning in We'll see you tomorrow 11 a. m. Eastern for the next episode of daily rates live with the boss