Hello, I am currently looking at doing a cash out refi on a rental property that I inherited. I recently renovated the property and put about 15k into remodeling bathrooms, floors, paint, etc. This property has no mortgage so the goal here is to leverage the equity to be in a strong position to purchase 1-2 investment properties in the near future (2023). I was recently offered 10.5% rate at 70% LTV. Right now I am cash flowing $1700 a month after HOA/Insurance expenses. After reviewing the loan details I am looking at an estimated monthly payment of $1797 a month. This will leave me about -$100 cash flow a month. Because of my current DTI situation I asked my mortgage broker to look for a DSCR product.
1. I know today's mortgage rates are at about 6.5%. Are the interest rates on DSCR loans typically 3-4% higher than current market rates for conventional?
2. This was just the first offer and I haven't responded to the mortgage broker's email yet but I feel as though I am being taken advantage of. Also I was thinking that having more of a cushion at least ($300-$400) cash flow can help me with unexpected cap X and other issues that may come up. Am I being unreasonable to think that this rate is ridiculously to high even with todays rates?
3. Any reccomendations, I was thinking maybe a HELOC but I hear that getting a HELOC on an investment property is much more difficult than a cash out refi. Any suggestions/advice would be much appreciated.
-Rookie Investor.
