The First Step to Closing a DSCR Loan
Categories: Blog Posts
Closing a DSCR loan can seem tricky, but it doesn’t have to be. Let’s break it down by looking at the first step to closing a DSCR loan. Before diving into the property details, you need to do is make sure you are ready for the DSCR loan. This step is all about reviewing a few personal factors to ensure a smooth approval process.
Credit Score
Your credit score plays a significant role in determining your loan terms. Most lenders want to see a score of 740 or above to offer the best rates. However, there are still options if your score is lower, even as low as 600. Just keep in mind, the lower your score, the more you may need to bring to the table in terms of down payment.
For example, a credit score in the 600 range, may be require a larger down payment or higher interest rates. This can impact the cash flow in the long run, therefore it’s essential to check your credit early to know what you’re working with.
Experience Level
Though experience as a landlord is not always required, it can help. If you’ve owned rental properties before, that’s a bonus! But don’t worry if you’re a first-timer. You can still qualify for a DSCR loan. If you’re new to real estate investing, you might need to hire a property manager to help manage the property once the deal closes. This shows the lender you’re serious about maintaining the property.
Where’s the Money?
Next, the lender will want to know where your down payment, closing costs, and reserves are coming from. It’s important to have this money lined up and ready. Lenders want these funds available to show proof of your savings or any assets you plan to use.
In conclusion
By focusing on getting yourself approved first, you set the foundation for a smooth DSCR loan process. When you’re ready with a solid credit score, a clear plan for managing the property, and your funds in place, you’re well on your way to securing the loan and moving closer to your investment goals.
Watch our most recent video to find out more about : The first step to closing a DSCR loan.
