DSCR Loan

DSCR loan programs, also known as debt service coverage ratio loans, are a type of loan offered to businesses and real estate investors. The loan amount is determined based on the borrower’s ability to repay the loan, as measured by their debt service coverage ratio.

Pros:

1:  Flexibility: DSCR loans offer flexible terms and repayment schedules, making them suitable for a wide range of borrowers.
2:  Favorable rates: Because DSCR loans are secured by the borrower’s assets, they often come with lower interest rates than unsecured loans.
3:  Lower risk: By assessing the borrower’s ability to repay the loan, DSCR loans mitigate the lender’s risk of default.
4:  Higher loan amounts: DSCR loans can provide larger loan amounts than other types of loans, due to the emphasis on the borrower’s ability to repay.
5:  Longer repayment terms: DSCR loans typically have longer repayment terms than other types of loans, allowing borrowers to make smaller, more manageable payments over time.

Cons:

1:  Higher requirements: DSCR loans often require more extensive financial documentation and a higher credit score than other types of loans.
2:  Lengthy application process: Due to the thorough underwriting process, DSCR loan applications can take longer to process and fund than other types of loans.
3:  Collateral required: DSCR loans are typically secured by the borrower’s assets, such as real estate, which can be a disadvantage for borrowers who don’t have sufficient collateral.
4:  Lower LTV ratios: DSCR loans may have lower loan-to-value (LTV) ratios than other types of loans, meaning borrowers may need to provide a higher down payment.
5:  Prepayment penalties: Some DSCR loans may have prepayment penalties, which can be a disadvantage for borrowers who want to pay off their loan early.

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Fairway Mortgage, LLC
NMLS #2767473

Office: (541) 654-8285
Cell: (541) 513-9000
Email: contact@fairwaymortgagellc.com
350 West 5th Avenue
Eugene, OR 97401

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