Tag Archive for: closing costs

Today we will discuss the 3 steps you need to take for DSCR loan approval. By following these three simple steps, you’ll be well on your way to securing the funding you need. Let’s break it down step by step.

Step 1: Check Your Credit Score

The first thing you need to focus on is your credit score. A good credit score can help you to get approved as well as qualify for better rates. Here’s what you should do:

  • Find out where your credit score stands: Check your credit report to see your current score.
  • Aim to improve it if needed: The higher your score, the better your rates, so take steps to boost it before applying.

Example: If your credit score is at 680, you might get a decent rate. But if you work to raise it to 720 or higher, you could save a lot on interest over the life of the loan!

Step 2: Secure the Cash to Close

Next up is making sure you have enough cash to cover the down payment, closing costs, and reserves. You need to be ready to show that you have these funds available. Here’s what to consider:

  • Down Payment: Do you have at least 20% or even 25% of the property’s purchase price?
  • Closing Costs: Additional fees when finalizing the loan.
  • Reserves: Make sure you have enough in reserve to cover a few months of expenses.

Example: For a property priced at $250,000, you might need $50,000 for the down payment and additional funds for closing costs. It’s crucial to have these amounts in your account and ready to go.

Step 3: Set Up Your LLC Properly

The final step before applying for a DSCR loan is to make sure your LLC is ready to go. Many investors use an LLC to buy properties, so it’s essential to have everything in order.

  • Check your documents: The LLC needs to be set up correctly. This includes all the necessary documents including the operating agreement and EIN number.
  • Have it ready for the property: This will make it easier to put the property under contract when the time comes.

Example: If your LLC isn’t fully set up, it could delay the loan process. Getting everything ready upfront will save you a lot of hassle down the road.

Ready to Apply for a DSCR Loan?

Now that you know the steps, you can get yourself pre-approved for a DSCR loan. Start by making sure your credit score is solid, you have the cash ready to close, and your LLC is set up the right way. Then, you’ll be in a great position to move forward when you find the right property. If you’re unsure about your approval status or need help calculating your DSCR ratio, feel free to reach out to us at The Cash Flow Company. We’re here to help you get the best loan possible so you can build wealth and create the financial freedom you’re after!

Watch our most recent video to find out more about “DSCR Loan Approval: 3 Steps YOU Need to Take”

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What Are Points and How Do They Impact Closing Costs?

As a real estate investor it is important to master the 4 key real estate loan calculations.  These 4 key calculations include how to calculate a point, simple interest, loan to ARV, and loan to value. Today we are going to focus on points and discover how they can impact your closing costs. Let’s start by taking a closer look at what points are.

What is a point?

When a lender says that they are going to charge you 1 or 2 points, what exactly does that mean? A point in the lender world means percent. Therefore, 2 points for example equals 2%. To clarify, it’s 2% of your loan amount, as opposed to 2% of your purchase price. This percentage is the amount that you are paying in the origination to the lender and it is included in your closing costs. The closing costs will also include down payment, appraisal, just to name a few. Let’s jump into an example to see how to calculate point.

For example:

Loan for $150,000

They will charge you 2% 

Origination fee = $3,000

$150,000 x .02 = $3,000

You need to understand how to calculate a point because it will impact your closing cost and your overall cost of doing business. 

In conclusion

Whether you’re a new investor or an old pro, you need to master the 4 key real estate loan calculations. As an investor, these are the things that you are going to come across when you are working with lenders. By focusing on how to calculate point today, you are now able to determine the origination fee quickly and easily. To learn how to master the 3 remaining key real estate loan calculations, please visit our website.

If you have any other questions or need a run through to show how things work, please contact us today! 

Watch our most recent video to Master These 4 Key Real Estate Loan Calculations.

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