Urgent: Need advice on choosing DSCR loan option

[Bans Sharma]

Hello,

I am in the process of purchasing a property for $1.17M and plan to put 25% down with a DSCR loan. My lender said it would be best to go with DSCR instead of conventional loan. My goal would be to either refinance(if the rates drop) or to pay off the loan within 7 to 15 years. I have these quotes, what option should I go with?

Scenario 1: 5/1 ARM

• Rate: 5.675%
• Monthly Payment: $5100
• Prepayment Penalty: 3/2/1
• Closing Cost:
  • Broker Fees: $11,016 (1.25%)
  • Lender Fees: ~$2,000
  • Loan Fees: $600
  • Plus standard title and other fees

Scenario 2: 30 year fixed

• Rate: 7.375%
• Monthly Payment: $6086
• Prepayment Penalty: 5/4/3/2/1
• Closing Cost:
  • Broker Fees: $11,016 (1.25%)
  • Lender Fees: ~$2,000
  • Loan Fees: $0
  Plus standard title and other fees

5/1 ARM looks attractive but not sure if that's what other people opt for that for a STR property? Which of these options do you think is most suitable, also is there room to negotiate?

Thanks!