What is a Debt Service Coverage Loan?

There is a lot of talk about ‘No Doc’ Investment Loans these days. Now, this is not some Sub Prime Loan from 2006 that allows for a blank application, and you get the loan. This is a loan that is qualified by the subject property income and no other income documentation is needed. They are also known as Debt Service Coverage Loans or DSCR Loans.

Debt service is the amount of money needed to service a mortgage, bond issue, or other type of loan. The debt service is simply the cash required to make the payments on a loan. The payments consist of both principal and interest.

The Debt Service Coverage Ratio (DSCR) is the borrower’s capacity to service or repay the annual debt payment about the amount of Net Operating Income (NOI) generated by the asset. The higher the DSCR ratio, the more net operating income is available to repay the debt.

DSCR reveals if a real estate property is making enough money to cover the mortgage or not. When a real estate investor applies for a new loan or refinances an existing mortgage, lenders evaluate the debt service coverage ratio as one indicator to calculate the maximum loan amount.

These Loans have a lot of great advantages.  Here are 5 of them:

1. Personal income is not taken into account by DSCR lenders:Because DSCR loans do not consider your personal financial information, they are significantly more accessible to borrowers who may not have a considerable quantity of liquid assets.
2. They have quicker application and closure times:Because you won’t need to submit any personal financial information or explain gaps in your job history, DSCR loans often have a streamlined, quick application procedure.
3. You can commit to many properties simultaneously: Some mortgages require you to commit to only one home at a time. As a result, you can’t get a loan for a second property unless you’ve paid off your previous one. That is not how DSCR loans work. Instead, they allow you to obtain many loans for different properties at the same time simultaneously.
4. Unlimited Cash-Out: The DSCR loan offers many benefits, one of which is the unlimited cash-out option. This means that you can take out as much cash as you need when you need it. This is a smart option for those who may need to unexpectedly cover a large expense.
5. Ideal for both novice and seasoned real estate investors:DSCR loans are ideal for both novice and seasoned real estate investors. If you’re new to investing, this loan can help you get started on the right foot. And if you’re an experienced investor, a DSCR loan can provide the funds you need to take your business to the next level. So whether you’re just starting out or you’re a seasoned real estate investor, a DSCR loan is a smart option for financing your real estate investments.

For More information on this and other loan programs visit www.FreshHomeLoan.com

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Garrick Werdmuller

President CEO

Fresh Home Loan Inc

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www.FreshHomeLoan.com

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All loan approvals are conditional and not guaranteed and subject to lender review of all information. Loan is conditionally approved when lender has issued approval in writing, but until all conditions are met, loan cannot be funded. Specified rates and [products may not be available to all borrowers. Rates subject to change according to market conditions and agreed upon lock times set by borrower. Fresh Home Loan Inc. is an Equal Opportunity Mortgage Broker in California. This licensee is performing acts for which a real estate license is required. Fresh Home Loan, Inc. is licensed by the California Department of Real Estate #02137513 NMLS # 2124104

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