Quote from @Kingsley Addo:
I have property I procured with hard money which is approaching the due time for me to refinance into a conventional loan. I got a quote from a company we decided to move forward with. This will be a DSCR loan. However, it appears we underestimated the annual taxes, so I am being told that after factoring in the higher taxes the property will not meet the DSCR requirements. Lender tells me my best option is to do a 10 year interest only with a 30 year term. I am new to RE investment and I am not sure if going the 10 year interest only is a good choice. I'm seeking advise on what my best options are? Thank you in advance
IO payments can make sense if it helps you stretch the DSCR to get a needed loan to value (ltv). These have been most popular for clients prioritizing cash out or leverage versus other things like cash flow, paying down debt, etc…
If you need a certain loan to value (ltv) to make the refinance work, it may be a good option. Either wise, you may want to explore a lower ltv. If you do IO payments, as others have said, ensure the IO term aligns with your investment strategy for that property.
