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in Laguna Hills, CA
Real estate investors in Laguna Hills have multiple financing paths. DSCR loans and hard money loans both serve investors, but they work very differently.
DSCR loans focus on rental income from the property itself. Hard money loans prioritize the asset value and speed. Understanding these differences helps you choose the right option for your investment goals.
Both are non-QM loan products designed for real estate investors. Your timeline, property type, and investment strategy will determine which loan makes the most sense.
DSCR loans qualify you based on rental property income, not your personal income. The lender calculates the debt service coverage ratio by dividing rental income by mortgage payment.
These loans work well for long-term rental property investors. You can secure financing without tax returns or W-2s. Rates vary by borrower profile and market conditions.
DSCR loans typically offer longer terms, usually 30 years. They function like traditional mortgages but use property cash flow for qualification instead of your personal earnings.
Hard money loans are short-term, asset-based financing options. Lenders focus on the property value rather than your credit or income. These loans fund quickly, often in days.
Investors use hard money for fix-and-flip projects and property acquisitions. The loan term typically ranges from 6 to 24 months. Rates vary by borrower profile and market conditions.
Hard money works when speed matters most. You can secure funding for properties that need significant repairs. The property itself serves as the primary collateral for the loan.
The main difference is the loan term length. DSCR loans offer 30-year terms while hard money loans last 6 to 24 months. This affects your monthly payment and overall strategy.
Approval criteria also differ significantly. DSCR loans require the property to generate sufficient rental income. Hard money lenders care most about property value and equity position.
Cost structures vary between these loan types. Hard money typically has higher rates but faster closing. DSCR loans cost less overall but take longer to fund. Rates vary by borrower profile and market conditions.
Choose DSCR loans if you plan to hold rental properties long-term. They offer lower payments and stable financing. Your property needs to generate enough rent to cover the mortgage.
Pick hard money loans for quick acquisitions or renovation projects. You need fast funding and plan to sell or refinance soon. These work best when timing is critical.
Laguna Hills investors often use both loan types for different deals. Match the financing to your specific project. Consider your exit strategy before choosing your loan type.
DSCR loans work best for rental properties, not flips. They require rental income for qualification. Hard money loans are better suited for fix-and-flip projects.
Hard money loans close much faster, often within days. DSCR loans typically take 3 to 4 weeks. Speed depends on your specific situation and lender.
DSCR loans usually require credit scores above 620. Hard money lenders are more flexible with credit. Both focus less on credit than traditional mortgages.
Yes, this is a common strategy. Complete your renovation with hard money, then refinance to a DSCR loan. This lets you hold the property long-term with better terms.
DSCR loans typically offer lower rates than hard money. Hard money rates are higher due to short terms and speed. Rates vary by borrower profile and market conditions.