💰 How to Get a DSCR Loan With No Prepayment Penalty| Daily Rates LIVE

💰 How to Get a DSCR Loan With No Prepayment Penalty
Join us LIVE to review Daily Mortgage Rates and Learn how investors can secure a DSCR loan with no prepayment penalty for added flexibility. We’ll explain how prepayment penalties work, how they differ from no-penalty options, and the trade-offs involved. You’ll also learn how loan terms and rates may change based on your structure choice. 

Watch a live example comparing penalty vs no-penalty scenarios with loan amount, rent, and monthly payments. Great for investors who want flexibility to refinance or sell early.

📌 Key takeaway: A no-prepayment-penalty DSCR loan gives investors more freedom to exit or refinance without extra costs.

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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 thousands of Non-QM mortgage loan program variations 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 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...

Transcript

0:12

Good morning. Welcome everyone to another episode of Daily Rates with the Mortgage Calculator. We are a lender and broker in over 20 states, and we have hundreds of loan officers that would be happy to help anyone out there looking for some of our standard or outside of the box programs. What we're going to do today, as we do every day, check out the markets in general, lots of news affecting the rates here. We will take a look at and see what that really means for our live mortgage rates for our standard programs. And then we're going to deep dive into the outside-the-box topic here for today, which is our no prepayment DSCR loans. So DSER non-QM loans are one of our favorite options for our investors out there. And we want to compare options with no prepayment penalty to ones with a more standard prepayment penalty. So let me switch my screen and we'll get into today's agenda. So when we're talking about rates in general, we typically want to look at the 10-year treasury yield. So here over the last five days, green is actually not good. So the rates have gone up a touch here. We did see some declines over the last few days, but today and towards the end of yesterday, we've seen it go up a little bit here. Hopefully, we can turn that back around to go in the right direction. If we pull over to the last year here with the one-year look back period, you can see we're here close to our uh one-year highs with a lot of the political news and a lot of uh inflation concerns. But let's see what that actually means for our live rates. Rates don't change that much daily with the news, but let's actually see what our standard programs have here. So to compare our different rates, you can go to our website anytime, click on today's rates, and we have all of our different standard programs so we compare side by side with a standard scenario. So here we set up a standard scenario, a one-unit single-family home, 500,000 purchase price, 300,000 loan amount. That corresponds to 60% loan to value, and we need a 605 co-credit score and an estimated 40% debt to income ratio. That way we can compare apples to apples across the programs. So, first up here are options for a conventional primary home, what most people think of when they think of a mortgage here. And today for our 30-year fixed conventional final APR 6.377, not much change from yesterday. And if our customer doesn't qualify for that option, we typically want to compare an FHA option, which allows more leniency on credit issues and a higher over debt overall debt to income ratio, but does require upfront and yearly mortgage insurance. So the rate looks a little better here at 5.625, but with the additional costs and fees, final APR comes in 6.506, which is just a little bit above conventional, which is pretty typical for these options. Now, our VA programs for our VA eligible borrowers are always amazing. Rates as low as 5.625 on that, but with the much lower fees and costs, overall APR is 5.881, much lower than FAL. The best option for our borrowers that are eligible for VA. And for our borrowers and properters, properties eligible for USDA. So if the party is eligible and the borrower income is eligible, these programs are pretty amazing to compare. A 5.625 rate today with all the costs and fees, APR comes in at 6.288, which is lower than FHA or conventional for a standard scenario when we compare side by side. So definitely a good option to compare if we're looking in those areas. Now, some pretty amazing updates here. We did have our non-QM alt doc options come in. Let me refresh this. Something something is not looking right there. There we go. So we had a little fluke there for a second. Non-QM alt doc options allow us to go beyond the standard and use alternative docs. So if our customer doesn't qualify for conventional using standard documentation or FHA, etc., we can switch to using alternative docs like make statements to 99s, especially for our self-employed borrowers. And we still have some pretty amazing options. Rates today come in at 6.375 rate, final APR.640, which is just a little bit above conventional, which is pretty typical when we switch to our non-QM options. And we can use non-QM doctors as well. Rate a little bit higher here, 6.5 rate this morning. Final APR 6.831. And we want to compare that to our conventional option for investment property coming in today at 6.375 rate, final APR 6.693, which is lower than our alt dock option, which is pretty typical, but not lower than our DSCR that stands for debt service coverage ratio, a very unique type of non-QM loan, where we just use the rents from the rental property to determine a DSCR ratio. If the rents cover the expenses, that is a positive DSCR ratio, aka the property cash flows. And we add a three-year prepayment penalty here. Our rates today come in at 6.125. Final APR 6.448, lower than conventional, absolutely amazing for our investors out there. And we can even add a five-year prepayment penalty for the best rate and cost options here. Rates as low as 5.875. Final APR 6.93, which blows conventional alt docs, all these other options out of the water, and is typically our favorite option for our investors out there. We have tons of other options here on the page. If you scroll down, there's dozens of other programs, second mortgages, HELOCs, rehab loans, fix and flips, all kinds of different options here. But what we wanted about today are investors out there that look to use a DSCR loan for some of the advantages there, but may not want a prepayment penalty. So obviously we have that listed here on the page. If you scroll a little bit further down, but I wanted to do an actual demo today where we could compare an actual property and an actual scenario side by side to see what the difference is when we have no prepayment penalty versus our best option for our best raising cost is when we had a five-year prepayment penalty. So first off, we want to look at a home. I use the same home we used on the last example. So this is just an investor type of home here in the area. Looks like it's actually two units, it has a main house and an ADU house. So great example for investors would be interested in this property. And for sale here in the area for $669,000. So a nice uh low loan amount here, uh, as far as uh we're not going to run into any limits, and we're able to compare side by side. So we agent no prepayment penalty to make this purchase if we're purchasing this home. I set up a scenario with a standard 20% down. Uh so we can compare side by side, and this is an option with no prepayment penalty. And just keep in mind that uh when we add a prepayment penalty, it's going to improve the uh rates and costs because our DSCR business purpose loans are not your conventional loans where a prepayment penalty would be prohibited. They are more towards the commercial end of the spectrum, and that way uh we can add a five-year prepayment penalty up to a five-year prepayment penalty, uh, which then allows us to get a much better rate and cost profile. So for no prepayment penalty, uh the lowest rate option I was able to pull up this morning, 6.625 rate has a cost of 2.85 when we're putting 20% down. And there's an option here for a 6.999 rate as a cost of 0.85, was the lowest cost option I could find for this exact scenario. Uh so again, this is putting 20% down, 80% loan to value, and we did use no prepayment penalty, but we did use that estimated 765 go credit score. So now what we want to do to put this into perspective is compare this to the same exact scenario, same exact setup, same exact home, same everything. Uh at a five-year prepayment penalty, you'll see these rates and costs are much better. So here's our option with a five-year prepayment penalty, everything else staying the same. And we can get rates as low as 6.125 this morning, as a cost of 3.1 discount points and costs. And we even have options for lender credit. Uh so the lowest cost option, uh, 7.125 rate, actually had 1.28 back in lender credits towards our resulting costs. Uh, so these are great options. You see, the rates are lower, but also the costs are lower as well because we were able to add that five-year prepayment penalty. So if we want to compare apples to apples here, uh, for example, a 6.625 rate has a 2.85 discount point cost here with no prepayment penalty. And we'll just have a 0.25 cost here if we're able to add the prepayment penalty. So a very big difference there. That's definitely up to our investors which option they want to choose. We can always do any option. We can do zero, one, two, three, four, five, and there are even some six-month prepayment penalty options at some of our programs. So lots of different ways to structure prepayment penalty. There's also ways to structure it differently as far as what the penalty is. So some of the options have a flat prepayment penalty of say five percent, uh, which would obviously better be better pricing, than some of our declining prepays, which may go from five and five percent year one, four percent year two, three percent year three, and so on. Um, there's also some that just have a flat uh prepayment penalty of say six months interest uh over the life of prepayment penalty. So whether you pay it off in the first year, the second year, or the third year, it's just going to be equal to six months of interest. So there's a lot of different ways to structure this. Uh, but the main thing is if our investor wants it or not, uh we need to figure out how many years we're gonna add, which is going to improve the price if we're able to add more years or a longer prepayment penalty period. So hopefully that makes some sense for our investors out there. Definitely some great options here. And of course, we can improve the price, improve the profile, or if our investor thinks they may sell the property in one or two years, we can adjust that to a one or two year prepayment penalty for their personal preference. So if you have any questions on any of these items, feel free to go to our website, themortgegarctare.com. We'll connect you with a loan officer in your area. They'll give you a full breakdown of everything. And we'll be back later this week with another update on Dayton Rates Live. Thanks, everybody. Have a great day.