What Affects Your Rates?

The Chosen Lender

With hundreds of lenders in our database, each lender specializes in a different loan type and is competitive with different loan programs.

Debt Service Coverage Ratio (DSCR)

The DSCR itself plays a significant role. Lenders prefer higher DSCRs as they indicate a stronger ability of the property to cover its debt obligations. A higher DSCR may lead to a more favorable interest rate.

Creditworthiness of the Borrower

The borrower's credit score and credit history are crucial. A higher credit score typically results in a lower interest rate, as it signals lower credit risk to the lender.

Loan-to-Value (LTV) Ratio

The LTV ratio represents the loan amount as a percentage of the property's appraised value. A lower LTV ratio (higher equity) can lead to more favorable interest rates, as it reduces the lender's risk.

Market Conditions

Overall market conditions and interest rate trends play a role. If interest rates in the broader market are low, borrowers may benefit from more favorable rates. Conversely, rising interest rates could lead to higher loan costs.

Loan Term

The term of the loan (e.g., 5 years, 10 years, 20 years) can affect the interest rate. Longer-term loans may have slightly higher rates due to the extended risk exposure for the lender.

Borrower's Experience and Track Record

The borrower's experience in managing similar properties or their track record in real estate investments can influence the lender's perception of risk and, consequently, the interest rate.

Borrowers Background

Any Criminal Records or Bankruptcy.

Borrower's Liquidity in a US Bank Account

The more funds available to be shown to the lender, the more confidence the lender will get in the deal. Usually, the lender likes to see 12 months of Taxes, Insurance, Interest payments, and Maintenance Reserves.

Economic and Industry Conditions

Economic conditions and the state of the real estate industry can impact interest rates. In times of economic uncertainty, lenders may adjust rates to account for increased risk.

Property Type and Location

The type of property and its location can impact the interest rate. Lenders may view certain property types or locations as riskier, influencing the pricing of the loan.

Market Competition

The level of competition among lenders can affect rates. Borrowers may obtain more competitive rates when multiple lenders are vying for their business.

Market Rental Rates

The prevailing rental rates in the market where the property is located can influence the DSCR and, consequently, the interest rate. Higher rental rates contribute to a stronger DSCR.

Global Economic Factors

Global economic factors, such as currency exchange rates and geopolitical events, can impact interest rates for international borrowers.