First DSCR - Are these costs normal?

[Susie C.]

I am planning to secure my first DSCR loan. I have a property in mind that is 350k. The lender sent me the following options (attached photo). I am a little bit confused on why the monthly payment is so little? For example, I have another property with 315k balance left, 3.375% interest rate and the total monthly for it is $2030 (includes escrow + taxes).

The DSCR loan is for interest rates that are double, slight less loan amount (~35k), but even with the difference in loan amount the monthly payment feels like it should be much more.

[Kevin Romines]

Taxes and insurance are escrowed, meaning they will be part of your payment, however the payments shown are just principal and interest. So your monthly payment will be higher than what is shown here. 

I question if you really want a 3 year pre-pay penalty? The interest rates have already moved down and should continue to go lower in 2024. It could go low enough that you may want to refinance, but with a 3 year pre-pay penalty you will not really want to refinance or will pay a healthy penalty if you do so. 

I would get a quote for a 1 & 2 year PPP to see where you would be at with those PPP timeframes. 

I hope this helps?