It might not be the most conventional route but if you take the necessary steps, you can pay your mortgage with a credit card.

Maybe you fell on hard times or think it’s a smart way to rack up points, but at one time or another, you may have wondered: Can you pay your mortgage with a credit card? Although your mortgage lender won’t let you use a credit card, technically, you can use workarounds to make it happen. 

However, we talked with experts to get details on the process and it’s not a recommended route. In fact, it could speak to a bigger financial issue that needs further attention. But, in case you are in an emergency, here’s what you need to know about paying for your mortgage with a credit card.

Can You Pay Your Mortgage With a Credit Card?

“The answer is yes and no,” says Joe DiSanto, founder and CEO at JoeDiSanto.com. “Your mortgage company won’t allow you to pay your monthly payment with a credit card on their website. They don’t want you paying your mortgage with a credit card. However, if you wanted to take some extra steps, you could accomplish it.”

The thing is, you’re not doing yourself a favor by paying your mortgage via credit card. For one, you’re not knocking off any amount of your debt because it’s like you’re transferring it somewhere else. Plus, your mortgage interest rate is lower than your credit card’s, so you’re paying more in interest. “I could see if you had a crazy emergency – maybe it would help to do it once or twice – but it’s definitely not a recommended practice,” says DiSanto.

Pros

• Prevents you from a late mortgage payment
• Could earn points through credit card company

Cons

• Doesn’t decrease your debt
• Increased interest rate
• Could signal a larger financial issue

How Do You Pay Your Mortgage with a Credit Card?

Some mortgage companies may let you pay your mortgage with a credit card. “Typically, financial companies charge between 3% and 5% for the privilege of paying your mortgage with a credit card,” says Mark Worthington, branch manager at Churchill Mortgage.

However, the more common way to pay your mortgage with a credit card is through workarounds. “The two ways that come to mind for me are: One, if you have convenience checks from your credit cards, you can write yourself a check into your bank account and then pay the mortgage from your bank account. You would, de facto, be using your credit card to pay your mortgage,” says DiSanto. “Another option is using services like Plastiq. They essentially allow you to pay almost anything with a credit card even if the recipient doesn’t accept credit cards.”

Things to Consider Before Paying Your Mortgage with a Credit Card

When you use such payment platforms though, you can expect a fee that ranges from 2% to 3%. DiSanto explains that the receiver of the money (the mortgage lender) pays the credit card company for offering the credit card payments. “Let’s say it’s 3%. If you buy something for $100 from a retailer, after they pay the credit card company, they only get $97. But most businesses accept that because they make more money offering credit card payments,” he says.

The Bottom Line

Let’s say you have a major life event that results in you being unable to pay your mortgage for one or two months. Can you pay your mortgage with a credit card? Yes. It’s not necessarily a wise financial decision, however, it could be useful during an emergency. Just be sure not to make a habit out of it. If you do, it’s probably time to analyze your overall financial health and what you can do to improve it.

Why You Should Trust Us

Mortgage information can get complicated so Benzinga has been aiming to breakdown complex topics into easy-to-understand material since 2010. In addition to mortgages, we answer various financial questions to ensure our 25 million monthly readers are armed with the insight they need. Whether you’re well-versed on the topic or are just starting out, we’re here to inform all kinds of people.

Caitlyn Fitzpatrick, the author of this article, has been an editor and writer since 2014. She’s covered a range of mortgage topics for Benzinga including DSCR mortgage loans and asset depletion mortgages. For this story, we spoke with Joe DiSanto, founder and CEO at JoeDiSanto.com (formerly Play Louder), an educational platform for financial strategy coaching and Mark Worthington, branch manager at Churchill Mortgage. They explained the key considerations with paying a mortgage with a credit card.

FAQ

Sources

• Joe DiSanto, founder and CEO at JoeDiSanto.com (formerly Play Louder), an educational platform for financial strategy coaching
• Mark Worthington, branch manager at Churchill Mortgage

The post Can You Pay Your Mortgage With a Credit Card? Experts Answer by Caitlyn Fitzpatrick appeared first on Benzinga. Visit Benzinga to get more great content like this.

If you’re looking for better mortgage terms, loan modification and refinance can be viable options to improve your financial health.

Financial struggles can happen to anyone, but homeowners have something big at stake: their house. If money has become more of a worry, it might be time to consider your options to make your mortgage payment more manageable. Among the routes you could go are loan modification and refinancing. Each one could make your payments more affordable, but key differences make one or the other a better option for some. Caitlyn Fitzpatrick, the author of this piece, has written about all different mortgage terms you should know and here she’s breaking down loan modification vs. refinance.

What is a Loan Modification?

A loan modification is when a borrower wants to adjust their current loan terms with their mortgage lender. The result is usually a more affordable monthly payment. While each lender is different, you must generally prove financial hardship, such as job loss, divorce, illness or medical condition, military duty, unforeseen expenses and natural disaster.

“The modification request will be reviewed and there may be a change in rate, a term extension, forbearance or principal deferment to lower your monthly payment to make it more manageable. They don’t have closing costs, but you may have a loan fee,” says Pahm Foxley, vice president of mortgage lending at Wasatch Peaks Credit Union.

Pros

• Lower monthly payments
• Typically a quicker process than refinancing
• Better for your credit than foreclosure
• No closing costs

Cons

• Could negatively impact your credit score
• Greater total cost since repayment term is longer
• Typically only available if you’re already behind or at risk of falling behind on payments

What is a Refinance?

A refinance is swapping out your current loan for a new one that typically has better terms. There are two common types. A cash-out refinance taps into your home equity and means you’ll apply for a larger loan than your current one. If approved, you get paid the difference between the two loans (most people need it for remodeling, high credit card debt, etc.). Then, you’ll make monthly payments toward the new mortgage. You could get a lower interest rate, but your mortgage term will be extended. A rate-and-term refinance will give you a new mortgage, but the principal loan amount is the same as your current one. The benefit is a better interest rate or term length (or both).

“You are typically required to have strong credit, income verification, pay closing costs and often require an appraisal,” says Foxley.

Pros

• Lower monthly payments, interest rates and/or total loan cost
• Allows you to switch mortgage lenders
• Different types for a more personalized route

Cons

• Typically a slower process than loan modification
• Solid income and credit score are required for a better rate
• Potential closing costs of 2% to 5% of loan amount

How to Choose Between Loan Modification vs. Refinance

You need to remember that you might not qualify for a loan modification and/or refinance. So, the choice might not even be yours. Loan modification requires proving a hardship and your lender might not qualify your situation as the level of hardship they need. But if you are in an approved hardship, you probably won’t qualify for refinancing. “If you are able to refinance, that is typically the option that will be offered,” says Foxley.

A homeowner who lost their job and has fallen months behind on mortgage payments may be a better candidate for loan modification. On the flip side, a homeowner with a solid income and credit score who just got divorced and wants to keep their house even though they’re short on monthly payments on their own may benefit from refinancing. That’s why it’s important to talk with a professional so they can review your specific situation.

Alternatives to Loan Modification and Refinancing 

The good news is that if neither loan modification nor refinancing make sense for your financial situation, there are other options:

• Forbearance: This allows you to temporarily pause or reduce monthly payments for a set time. Interest will continue to accrue, though.
• Repayment plans: If you’ve missed payments, you can contact your mortgage lender to see if you can set up a repayment plan. This means a portion of your past-due payments will be added to your regular monthly payments over a certain period.
• Deed-in-lieu of foreclosure: In a deed-in-lieu of foreclosure, the homeowner voluntarily transfers the home’s ownership to the mortgage lender. This prevents the foreclosure process, credit score hit, etc.
• Government assistance programs: Each state has its own resources to help homeowners with financial hardships that are impacting their mortgages. Look up your state’s programs for more details.
• Home equity line of credit (HELOC): A HELOC allows you to borrow money based on your home’s equity. For example, if you have $300,000 left on your mortgage and your home is appraised for $400,000, you could access up to $100,000.
• Selling the home: If you’re in a situation where you’re looking for ways to keep your home, selling it is probably the last thing you want to do. However, it might come down to that. So, consider all options, even when they’re tough.

Why You Should Trust Us

Since 2010, Benzinga has focused on delivering the most reliable, up-to-date information in the financial space. Whether you’re a potential homebuyer hoping to purchase your first home or an investor who needs insight, we’re here to help your financial health, including when it comes to buying a home. About 25 million readers trust us monthly to answer their most important questions.

Caitlyn Fitzpatrick, the author of this article, has been an editor and writer since 2014. Although her background is in commerce journalism, she has been working with Benzinga to bring her smart-buying expertise to readers. For this story, we spoke with Pahm Foxley, vice president of mortgage lending at Wasatch Peaks Credit Union, to provide real-world insight on loan modification vs. refinance.

FAQ

Sources 

• Pahm Foxley, vice president of mortgage lending at Wasatch Peaks Credit Union

The post Loan Modification vs. Refinance: Which Route Should You Go? by Caitlyn Fitzpatrick appeared first on Benzinga. Visit Benzinga to get more great content like this.

You currently have a house, but you want to rent it out. Will your mortgage lender allow you to? Here’s what you need to know.

So, you want to get into the rental property business. You already have a home, but you don’t know the ins and outs of converting it into an investment property by renting it out. After all, you have a mortgage, meaning you haven’t paid it off yet. Is it technically yours to rent out? Do you have to get permission? We asked an expert: Can I rent out my house without telling my mortgage lender? Here’s what he said.

Can I Rent Out My House Without Telling My Mortgage Lender?

The one-year mark is a pivotal moment because that’s when you can convert your home from your primary residence into an investment property. Once you hit the one-year minimum primary occupancy, you don’t need to inform your mortgage lender that you’re renting it out.

“While it may be a good idea to call your mortgage lender servicing department and ask them if there are any specific requirements or restrictions on your specific mortgage, most mortgage types allow for you to convert your primary residence into an investment property after the one-year primary occupancy term. Typically, there is no requirement to notify your mortgage lender after the one year of primary residence occupancy has passed,” says Ken Sisson, realtor and licensed real estate broker Coldwell Banker Realty.

Rules and Regulations for Renting Out Your Home

Another key part of renting out your home is that you, the homeowner, must occupy it for at least one year, meaning it’s not just sitting there waiting for the time to be up. Only then can you convert it into an investment property. Also, generally, mortgage lenders only let someone obtain one primary home mortgage in 12 months.

“With mortgage guidelines it is possible to have an exception made due to extenuating circumstances however the nature of exceptions is that there’s no guarantee,” says Sisson. “Extenuating circumstances may be something like having to move for a job relocation only a couple of months after purchasing a home, etc.”

How to Let Your Lender Know About Your Rental Plans

Once that year has passed, you don’t need to let your mortgage lender know about your rental plans. However, you’ll want to ask them to send your billing statements and other correspondences to your new address.

The Bottom Line

Before you move to rent out your house, you need to make sure one year has passed with you living in the home. From there, you can do what you’d like. However, you’ll want to let your mortgage lender know about your change of address so there isn’t a mix-up with your correspondences. Plus, it’s never a bad idea to cover your bases by asking them if you need any information now that you’re renting out the property.

Why You Should Trust Us

Around 25 million readers trust Benzinga monthly to answer their most important financial questions. Since 2010, we’ve been aiming to provide the most up-to-date, expert-driven information so you can make the right financial choices. Signing on for a mortgage is one of your biggest decisions, so let us guide you on your home-buying journey.

Caitlyn Fitzpatrick, the author of this article, has been an editor and writer since 2014. Her background is in commerce journalism, so she’s passionate about helping shoppers make smart decisions. For this story, we spoke with Ken Sisson, realtor and licensed real estate broker Coldwell Banker Realty. He explored what homeowners need to know about renting out their house.

FAQ

Sources

• Ken Sisson, realtor and licensed real estate broker Coldwell Banker Realty

The post Can I Rent Out My House Without Telling My Mortgage Lender? by Caitlyn Fitzpatrick appeared first on Benzinga. Visit Benzinga to get more great content like this.

Balloon mortgages are not uncommon when purchasing a single-family home, but here’s what you need to know about the nontraditional route.

There are many types of mortgages; however, a balloon mortgage isn’t even one of the most common ones. Some people might find that it’s their only real option though, so it might be worth looking into all possibilities. A balloon mortgage, a non-qualified mortgage (non-QM) loan, allows the homebuyer to have lower monthly payments, but eventually, they’ll have to pay the remaining balance off. Again, it’s not a regular route, so as always, look at your personal financial situation to determine if it’s worth pursuing. So, what is a balloon mortgage exactly? Here’s what you need to know about the nontraditional loan.

What is a Balloon Mortgage?

Most people have a 30-year mortgage. With a balloon mortgage though, that time is compacted into, usually, five to seven years. The monthly payments are lower and possibly nonexistent. The interest rates could be lower or higher when compared to traditional mortgages depending on the circumstances. However, at the end of the term, the homebuyer must pay off the remaining balance. Like a balloon, the small payments expand at the very end.

“People buying single-family residences to live are not likely going to encounter balloon mortgages. Typically, these loans are associated with investments and or hard money financing,” says Matt Schwartz, mortgage broker at VA Loan Network.

Pros

• Lower monthly payments
• Potentially lower interest rates

Cons

• Lump sum due at the end of term
• Not offered by many mortgage lenders
• Risky for homebuyer

How Does a Balloon Mortgage Work?

You’ll enjoy your low monthly mortgage payments for five to seven years. But then, there will be a “balloon” payment at the very end and the remaining balance is due. Although you’re expected to pay that amount, some owners opt to refinance or sell the property when the time comes to avoid that payment.

“One thing I always emphasize with balloon mortgages is that they require a level of planning and financial discipline that not every borrower is prepared for – and that’s OK. These loans are designed for very specific situations, not broad appeal,” says Estela Nagahashi, interim CEO at University Credit Union (CA).

Who is a Balloon Mortgage Best For?

A balloon mortgage is quite specific, so it doesn’t make sense for most borrowers. Someone who is extremely confident in their finances and has a solid plan for that “balloon” payment at the end would be the best candidate.

“It could work for someone who expects a significant increase in income or has other financial resources they plan to tap into later, like selling another property, receiving a large bonus or accessing funds from an investment. The key is that they need to be absolutely sure those funds will be available when the time comes,” says Nagahashi.

Who Should Avoid a Balloon Mortgage?

One of the benefits of a traditional fixed-rate loan is that you know what to expect with your payments. However, that super payment at the end of a balloon mortgage can hit harder than you realize. So, someone who wants that long-term stability or has no firm grasp on future finances should avoid this type of mortgage.

“It’s not a great option for anyone who’s unsure about their ability to refinance later. Life happens – your credit score could take a hit, interest rates could rise or the housing market could cool off, making it harder to refinance or sell,” says Nagahashi. “If your entire plan depends on something going right in the future and there’s no backup plan, that’s a red flag.”

The Bottom Line

There’s a reason that you might not have heard the term “balloon mortgage” earlier. It’s not a common route when seeking homeownership; however, for the right person it could be a viable option. As with any type of mortgage you’re signing on the dotted line for, be certain that you’ll be able to meet your obligations, which in this case is paying that lump sum when the time comes. After all, your financial health could depend on it.

Why You Should Trust Us

Benzinga has built up a readership of around 25 million visitors per month and that’s in large part due to our thorough examination of a range of financial topics. We’ve made it our mission to help readers of all different backgrounds understand their options regarding mortgages. While it typically comes down to your situation, we explain what you need to know to make smart decisions.

Caitlyn Fitzpatrick, the author of this article, has been an editor and writer since 2014. She has years of experience researching complex topics and interviewing experts to provide you with easy-to-digest information. To gather real-world insight, we talked with Matt Schwartz, mortgage broker at VA Loan Network, and Estela Nagahashi, interim CEO at University Credit Union (CA), to understand the pros and cons of this specific mortgage loan.

FAQ

Sources

• Matt Schwartz, mortgage broker at VA Loan Network
• Estela Nagahashi, interim CEO at University Credit Union (CA)

The post What Is a Balloon Mortgage? Here’s What You Need to Know by Caitlyn Fitzpatrick appeared first on Benzinga. Visit Benzinga to get more great content like this.

Every homeowner pays per diem interest, but timing can play a significant role in how it impacts your wallet.

Joining the homeowners club means you’ll learn many new words in the mortgage world. One of them is per diem interest, which will inevitably come up when obtaining a new mortgage loan or paying off an existing one. You may have some control in the matter though, as you can work with your mortgage lender to time it to work best for you. It all comes down to when you’re closing on your home and when the first payment is due. Consider per diem interest one of those random homeowner things you didn’t know you needed to address. It comes with the territory.

What is Per Diem Interest?

Per diem interest is calculated by day, specifically the days between the closing date of your mortgage loan and the date when your first mortgage payment is due. For example, if you’re closing on your home on May 4, but your first payment is due on June 1 (as most pay cycles start on the first of the month), you’ll pay per diem interest for each day between those dates. But if you close on May 25 and your payment is due on June 1, you need to pay less per diem interest. That might not necessarily be ideal, though.

“By paying more per diem up front, you can potentially extend your first full mortgage payment out to the following month versus making your first full mortgage payment sooner and limiting per diem,” says Ken Sisson, realtor and licensed real estate broker Coldwell Banker Realty. “This isn’t always possible to do, though. It depends mostly on when, in a given month, your loan closing is occurring.”

How Does Per Diem Interest Work?

Multiply your loan amount by the annual interest rate, then divide by 360 (days). That’s your per diem interest or daily interest rate between closing and the first payment.

“When you are getting a new loan or paying off an existing loan, there are a certain number of days of interest that need to be charged as part of the process of doing either of those things,” says Sisson. “Knowing the facts is important when it comes to planning out a closing date and controlling your finances in the short term.”

The Bottom Line

Per diem interest is just one of those closing costs homeowners must address before repaying their loan. You can have some control over the matter, though, so it’s not a bad idea to bring up per diem interest when you’re shopping around for a lender. With a little smart planning, you can make it work for your preference. “Per diem is a one-time thing, so that’s good!” says Sisson.

Why You Should Trust Us

From stock market news to mortgage insights, Benzinga serves around 25 million readers each month with the answers they want. We take pride in ensuring we have the most up-to-date information so you can make the best decisions for your financial health. Besides being experts ourselves, we regularly consult other real-world professionals for their takes.

Caitlyn Fitzpatrick, the author of this article, has been an editor and writer since 2014. She has covered a range of mortgage topics for Benzinga including using a HELOC and specialty loans, like a DSCR mortgage loan. To be sure we’re providing you with the most reliable information, we talked with Ken Sisson, realtor and licensed real estate broker Coldwell Banker Realty, to explain the ins and outs of per diem interest.

FAQ

Sources

• Ken Sisson, realtor and licensed real estate broker Coldwell Banker Realty

The post Here’s How Per Diem Interest Impacts Your Mortgage by Caitlyn Fitzpatrick appeared first on Benzinga. Visit Benzinga to get more great content like this.

Refinancing can be useful for homeowners but changing interest rates could impact the market.

Unless you have a fixed mortgage loan, you can count on your interest rate changing throughout the years. Those increasing and decreasing rates, though, can play a role in your financial decisions, such as refinancing. Interest rates have dropped recently, which, in theory, should signal more people to rethink their mortgage. However, as with all mortgage decisions, it is extremely personal and doesn’t make sense for everyone.

“People refinance for many different reasons, including taking out additional equity, taking someone on or off a mortgage or title and bringing the monthly payment or rate down,” says Sarah DeFlorio, vice president of mortgage banking at William Raveis Mortgage.

How Are Decreasing Interest Rates Changing the Way People Refinance?

As of April 7, 2025, a 30-year fixed refinance has a national average of 6.79%, according to Bankrate. So, it could make sense to refinance, aka swapping a current mortgage for one with better terms. Whether or not homeowners will utilize their ability to refinance heavily depends on what their current rate is.

“Rates are currently lower than they have been in previous years, but for those that have current rates in the 2% to 4% range, they are looking at alternatives to utilize the equity in their home, such as a home equity line of credit or home equity loan,” says Rose Krieger, senior home loan specialist at Churchill Mortgage.

For those with a solid interest rate, a home equity line of credit (HELOC) could be a smarter way to go since you’re borrowing funds against the equity in your home instead of getting a new loan altogether.

Interest Rate Trends in 2025

Interest rates are being affected by many factors, explains Krieger. Between the current unemployment rate, inflation trends, economic growth and Federal Reserve trends, there isn’t just one thing pointing to the market. However, the good news for homeowners is that the general trajectory for interest rates remains down.

It is interesting timing, though, as the tariffs implemented by President Donald Trump (being dubbed “Trump tariffs”) recently went into motion.

“We are experiencing the impacts of the tariffs, which were announced [April 2], in real time,” says DeFlorio. “As of now, that has driven many investors back to the safety of the bond market, bringing yields down, which should mean lower rates. It remains to be seen what the long-term impacts are and banks will be looking for some stability in the markets before making any major changes.”

Refinancing Options

Not happy with your current mortgage loan? You can turn to the best refinance lenders to replace it with a new one. There are different mortgage refinance options, such as a rate-and-term refinance or cash-out refinance. The one for you depends on your financial situation and needs, so this isn’t a one-size-fits-all solution.

The Bottom Line

In an ideal world, we could tell you exactly what to do in your financial situation. However, since finances are highly personal and every mortgage has different terms, your best route is to talk with a professional to see if refinancing is a worthy option. The lower interest rate may look tempting, but the grass isn’t always greener on the other side, so it’s worth taking a 360-degree look.

Why You Should Trust Us

Nearly 25 million people trust Benzinga monthly for their financial news, market details and mortgage insights. Whether you’re a first-time homeowner or real estate investor, we strive to answer questions you didn’t even know you had. Not only does our team have years and years of experience, but we tap other professionals to provide their real-world understandings.

Caitlyn Fitzpatrick, the author of this piece, has been an editor and writer since 2014. With a background rooted in commerce journalism, she cares about how readers spend their money. For this story, we talked with Rose Krieger, senior home loan specialist at Churchill Mortgage and Sarah DeFlorio, vice president of mortgage banking at William Raveis Mortgage. They explained the connection between interest rates and refinancing.

FAQ

Sources

• Sarah DeFlorio, vice president of mortgage banking at William Raveis Mortgage
• Rose Krieger, senior home loan specialist at Churchill Mortgage

The post How Decreasing Interest Rates Are Changing the Way People Refinance, According to Experts by Caitlyn Fitzpatrick appeared first on Benzinga. Visit Benzinga to get more great content like this.

One of these loans is meant for rental properties, and the other is the route most potential homebuyers take. We’re exploring both types so you can make the right decision.

There are many types of mortgage loans out there, so deciphering between them can be confusing. Here, we’re concentrating on two specific types: debt-service coverage ratio (DSCR) loans and conventional loans. You may be more familiar with conventional loans, which are the most common type. However, there are times and places for DSCR loans. Both types have their pros and cons. So, join the author of this piece, who has written about the mortgage loan approval process, home equity line of credits (HELOCs), refinancing and more, as we dive into everything you need to know about a DSCR loan vs. conventional loan.

What are DSCR loans?

A DSCR loan, a non-qualified mortgage (non-QM) loan, is for real estate investors with a rental property they’re using for income. A crucial piece of this type of loan is that the property must have a positive cash flow. A lender will also look at your financial information, but the emphasis is on the property and whether it’s making money. This kind of loan must be used for an investment property and can’t be used as a personal residence.

“The key factor is whether the property earns enough to cover debt service and expenses, typically verified through leases. Lenders assess how long renters are contractually obligated to pay,” says Joe DiSanto, founder and CEO at Play Louder, an educational platform for financial strategy coaching.

Pros

• Designed specifically for real estate investors
• Tend to have a quicker qualification process
• Tend to be easier to qualify for
• Fewer regulatory and compliance requirements

Cons

• Higher interest rates
• Can’t be used for a personal residence

Who is a DSCR Loan Best for?

Since you can’t live in a property with a DSCR loan, it’s for those using a unit to generate income.

“DSCR loans are ideal for real estate investors who buy and hold residential properties for rental income,” says Ben Fertig, founder and president at Constructive Capital. “For investors looking to enter the rental market, DSCR loans lower the barrier of entry by focusing on the property’s income rather than the borrower’s personal finances. In fact, they’re one of the most powerful tools a real estate investor can have.”

What Are Conventional Loans?

The most common type of loan is the conventional loan. That means you have a wide range of conventional loan lenders. This type of loan is what most people seek when they’re looking to borrow money to buy a home they’ll live in.

“With conventional loans, the qualifying criteria are based on the borrower’s debt-to-income (DTI), which compares their total monthly debts—including the new mortgage payment—to their monthly income,” says Fertig. “While conventional loans can also be used by investors, there are several factors that can make them less than ideal.”

For one, a conventional loan is based on a person’s finances, not their business. That means they take on any associated risks.

Pros

• Various types of conventional loans
• Many lender options
• Tend to have solid terms
• Tend to be more flexible than government-backed loans

Cons

• May be a longer qualification process
• Not the best for investors

Who is a Conventional Loan Best for?

While DSCR loans are specifically for real estate investors, conventional loans can be used for people who plan to live in the home or for real estate investors. This type of loan doesn’t provide the same benefits as a DSCR loan, so generally, it’s best for people using the property as their primary or secondary residence.

“For those who qualify, conventional loans are generally the best option due to their favorable terms,” says DiSanto.

DSCR vs Conventional Loans

How to Choose Between DSCR and Conventional Loans

A DSCR loan doesn’t apply to your situation if you don’t have an investment property. However, regular homebuyers and real estate investors can apply for a conventional loan. The difference for the real estate investor is that instead of focusing on the income generated from their rental property, as a DSCR loan does, a conventional loan will look at their finances to decide if they’re approved.

Why You Should Trust Us

Benzinga has made it its business to dive deep into all aspects of mortgage loans and other financial topics. Around 25 million people come to us each month to ask questions. Not only are we experts ourselves, but we consult other professionals who have real-life experience to offer worthy perspectives.

Caitlyn Fitzpatrick, the author of this article, has been an editor and writer since 2014. She has years of experience interviewing experts in various professions to understand particular topics. Fitzpatrick enjoys sharing that insight with readers so they can make smart financial decisions. For this story, we talked with Joe DiSanto, founder and CEO at Play Louder, an educational platform for financial strategy coaching, and Ben Fertig, founder and president at Constructive Capital. They told us everything you need to know about DSCR loans vs. conventional loans.

The Bottom Line

Most potential homeowners will go the conventional route when it comes to a DSCR loan vs. a conventional loan. A DSCR loan is a specific type created for investment properties, and owners can’t live in them. That’s good news, as conventional loans tend to have solid terms. Just make sure you’re doing everything you can to get your personal credit profile and other signs of mortgage loan approval in tip-top shape as soon as possible.

FAQ

Sources 

• Joe DiSanto, founder and CEO at Play Louder, an educational platform for financial strategy coaching
• Ben Fertig, founder and president at Constructive Capital

The post DSCR Loan vs. Conventional Loan: Real Estate Investors Could Benefit From Either by Caitlyn Fitzpatrick appeared first on Benzinga. Visit Benzinga to get more great content like this.

Real estate investors may find it beneficial to apply for a DSCR mortgage loan, a unique option for those with a property for rental income.

There are some mortgage loans that just about anyone can apply for, and others designed for specific purposes. A debt-service coverage ratio (DSCR) loan falls into the latter category. Your average potential homebuyer won’t be going for this type, but real estate investors could find it a smart route. People with a property for rental income can apply, but a key factor in getting approved is a positive cash flow. Now, if you want to get into the nitty-gritty, we’re answering the question of the hour: What is a DSCR mortgage loan?

What is a DSCR Mortgage Loan?

A DSCR loan is a non-qualified mortgage (non-QM) loan designed for those who may not qualify for traditional mortgage loans because of their income, credit score, etc. It’s intended for people who have a property they rent out for income, so the focus of the loan is on the property’s income success. Typically, a DSCR loan has a 30-year term period. “What makes DSCR loans unique is that the primary qualifying factor is whether or not the property has a positive cash flow,” says Ben Fertig, founder and president at Constructive Capital.

How Does a DSCR Mortgage Work?

The key to a DSCR loan is that the property generates enough rental income to cover its debt obligations. While the lender will look at the borrower’s personal information, including their credit profile, liquid assets and major financial events, the focus is on the income from the rental property and if it has positive cash flow. To get a DSCR loan, look for a top mortgage lender offering this type.

“When an investor wants to purchase or refinance a rental property, the lender assesses the property’s expected rental income and compares it to its expenses, including loan principal and interest, property taxes, insurance and homeowners’ association dues, if applicable. If the property’s income to expenses ratio is 1.0 or higher, the property is considered cash flow positive,” says Fertig.

The Bottom Line

A DSCR loan isn’t your typical mortgage loan. It’s for those with an investment property – and that investment profit is in the green. While you need a substantial amount down and the interest rates tend to be higher, those factors typically don’t hit as hard as they would in a traditional primary residence loan scenario. It’s important to find a lender with expertise in this type of non-QM loan so you can have a smooth process and a digestible interest rate.

Why You Should Trust Us

Here at Benzinga, we answer all your mortgage questions – no matter how general or niche they are. That’s because we have around 25 million readers each month looking for answers to their most pondered-over financial questions. Our mission is to present you with clear facts so you can make the smartest decisions for your personal situation.

Caitlyn Fitzpatrick, the author of this article, has been an editor and writer since 2014. As a commerce journalist, she understands that spending your money is always a big decision (whether buying a product or signing on the dotted line for a 30-year mortgage). To gather real-world insight, we spoke with Ben Fertig, founder and president at Constructive Capital, on what we need to know about DSCR loans.

FAQ

Sources

•  Ben Fertig, founder and president at Constructive Capital

The post What is a DSCR Mortgage Loan? Here’s What Investors Need to Know by Caitlyn Fitzpatrick appeared first on Benzinga. Visit Benzinga to get more great content like this.

Yes, as you move through the mortgage approval process, you’ll likely need bank statements to prove your income. We asked experts how many you need.

Buying a house? Congratulations! But be prepared to provide so much personal information about yourself that even you learn something new. One of those key documents is bank statements. After all, you have to prove that you (and whoever you’re buying a home with) would be a responsible borrower. It’s never a bad idea to prepare in advance so that when you’re asked for them, you know exactly what to get. How many months of bank statements for a mortgage do you need? We got the official answer from two seasoned mortgage experts.

What is a Bank Statement?

A bank statement summarizes your account activity – typically, in monthly increments. It’ll show your deposits, withdrawals, transfers, written checks and balances. Even if you don’t go for a bank statement-only mortgage, you’ll still need to provide the documents.

“If an applicant has several bank or brokerage accounts, they should be prepared to give the lenders copies of all of them,” says H. Jack Miller, president and CEO at Gelt Financial, LLC. “Lenders will want to see your name, account number and dates at a minimum on the statements. If you print screen shots or PDFs, be aware this info must be on them.”

Why Do Lenders Need Bank Statements?

A lender is taking the upfront risk of giving you a loan, so they want to analyze if you’re a worthy borrower. For example, if a lender looks at your bank statements and sees you have frequent overdrafts, it could indicate that you aren’t able to manage your finances to make a monthly mortgage payment.

“Try not to make sudden moves with your money before applying for a mortgage,” says Mike Roberts, co-founder and CEO at City Creek Mortgage. “No big deposits, no last-minute account transfers and definitely no overdrafts. Lenders want consistency. If something looks off, they’ll ask questions, and the more explaining you have to do, the slower the approval process gets.”

The Bottom Line

When buying a home, a lender is going to ask for a whole lot of information, specifically about your finances. To ensure you’re in the best spot for a loan, keep an eye on your accounts so there aren’t any overdrafts. Also, avoid strange deposits and inconsistent income when possible. When it’s time to hand over your bank statements, you want them to look reliable. The good news is, it’s easy enough to log into your online banking or get in contact with your bank to get the necessary paperwork.

Why You Should Trust Us

No matter how financially savvy you consider yourself, it’s easy to get tripped up in the details. That’s why about 25 million people turn to Benzinga each month for their finance news, as well as insight into their most basic and complex questions. We aim to speak to all sorts of potential homebuyers, no matter where they are in their home-buying journey.

Caitlyn Fitzpatrick, the author of this article, has been an editor and writer since 2014. In addition to Benzinga, her work can also be found in U.S. News & World Report, Business Insider, Reader’s Digest and more. To ensure we’re providing the most up-to-date information, we spoke with H. Jack Miller, president and CEO at Gelt Financial, LLC and Mike Roberts, co-founder and CEO at City Creek Mortgage about bank statements for mortgage approvals.

FAQ

Sources

• H. Jack Miller, president and CEO at Gelt Financial, LLC
• Mike Roberts, co-founder and CEO at City Creek Mortgage

The post How Many Months of Bank Statements for a Mortgage Are Needed? by Caitlyn Fitzpatrick appeared first on Benzinga. Visit Benzinga to get more great content like this.

We spoke with a mortgage expert to help you determine whether an asset depletion mortgage is the right decision for your financial situation.

It may feel like there are endless mortgage loan options. While we don’t want to add stress by discussing another one, self-employed borrowers, high-net-worth individuals and retirees may find that an asset depletion mortgage is the smartest route for them. That’s because, instead of basing your loan terms on your income – which could be inconsistent for some people – it’s based on your assets. There are some key things you need to know before deciding if you want to proceed with an asset depletion mortgage. We spoke with a mortgage loan expert to help steer you in the right direction.

What is an Asset Depletion Mortgage?

Maybe you’re self-employed, or perhaps you’re retired and looking for a loan. Whatever the case, you don’t have a traditional monthly income. In that situation, an asset depletion mortgage could be beneficial because it qualifies you for a loan based on your liquid assets rather than income. Those assets include cash, bank accounts, real estate and retirement accounts.

“These loans are ideal for borrowers with significant assets but unconventional income,” says Josip Rupena, CEO of Milo. “Qualification criteria vary, so it’s important to work with a lender experienced in asset-based financing. A tailored approach ensures borrowers maximize their assets while securing the best possible mortgage terms.”

How Does an Asset Depletion Mortgage Work?

A lender will assess your assets instead of relying on your W-2 income or tax returns. The lender will divide your eligible assets over the loan term to determine if you qualify. This calculation shows them if you can repay the mortgage should you move forward with the loan. 

It would be smart to roughly calculate your assets before going to a lender so you know what to expect. Let’s say you’re a homeowner – to figure out how much equity you have in your house, subtract the amount you owe in loans from the property’s current value.

Asset Depletion Mortgage Options

Asset depletion loans are available through conventional, jumbo and non-qualifying mortgage (non-QM) loans. 

“Some programs strictly follow agency guidelines, while others offer more flexibility in calculating eligible assets and income,” says Rupena. “The right option depends on the borrower’s financial profile and the lender’s approach to evaluating assets.” 

Since asset depletion loans are for people with unique financial situations, you can start by looking for the best mortgage lenders that don’t require tax returns.

The Bottom Line

Most potential borrowers will probably find that an asset depletion mortgage isn’t right for them. However, self-employed borrowers, high-net-worth individuals and retirees can utilize their liquid assets to obtain a loan when a traditional monthly income isn’t part of their financial situation. As Rupena says, look for a lender with asset-based financing experience. It could be the difference between mortgage terms you’re happy with and ones that could be better.

Why You Should Trust Us

Whether it’s financial news or mortgage insight, about 25 million readers rely on Benzinga monthly for their need-to-know information. We don’t skimp on thorough research and enjoy speaking with passionate experts in their work. No matter your level of financial literacy, we aim to speak to a range of readers.

Caitlyn Fitzpatrick, the author of this piece, has been an editor and writer since 2014. Her specialty lies in commerce journalism, which means she’s all about advising readers on how to spend their money smartly – whether it’s on a shopping spree or in a loan agreement. We also spoke with Josip Rupena, CEO of Milo, a crypto-backed mortgage and loan company, to get real-world insight into who should potentially obtain an asset depletion mortgage.

FAQ

Sources

• Josip Rupena, CEO of Milo, a crypto-backed mortgage and loan company

The post What is an Asset Depletion Mortgage? Here’s What You Need to Know by Caitlyn Fitzpatrick appeared first on Benzinga. Visit Benzinga to get more great content like this.