What Should You Expect When Refinancing a Mixed-Use Mortgage?
A mixed-use property holds a multifamily residence with retail or office space in the same building. Here, you use part of the property as your primary residence and another part for business. Let’s say you have taken out a mixed-use mortgage and you wish to refinance it, what should you expect?
The Loan-to-Value (LTV) Ratio
To refinance a mixed-use mortgage, you need a maximum LTV of 80 percent on a rate and term refinance. This makes you eligible to reduce the interest rate on the mortgage or increase the term using a new mortgage. For instance, this applies if you want to refinance a 15-year mortgage into a 30-year fixed-rate mortgage.
A higher LTV is acceptable, though this depends on how strong your Debt Service Coverage Ratio (DSCR) is. However, you need to expect an increase in the interest rate and fees as the LTV increases.
The Credit Score
You need 680+ FICO to qualify for this loan. This gives you the best option for refinancing an existing loan. Anything lower and the rates and fees go up.
Debt Service Coverage Ratio (DSCR)
This is a risk analysis tool the lender uses to determine availability of net income to pay back the loan. Lenders require a minimum DSCR of 1.15 for you to qualify. This translates into $1.15 of your income, for every $1.00 of your mortgage payment.
The lender also looks at your tenant history before giving you this loan. One aspect the lender looks at is the time left on the lease.
What We Do
We have taken the process of applying for a mixed-use property and streamlined it for your benefit. This means that you can get a lender faster and apply for the loan much quicker when you work with us.
*This product is not regulated by the New York State Department of Financial Services