Short-term loans are a tool for buying and fixing. Once a Dover rental is repaired and leased, keeping it on a bridge loan, hard money loan or a balloon note costs money every month. A rate-and-term refinance moves it onto a long-term loan sized to the rent.
In short: LendingStreet offers DSCR rate-and-term refinances on 1-8 unit rentals in Dover and Kent County to pay off bridge, hard money, seller-held or bank loans. Rate-and-term goes up to 80% LTV on some programs, 30-year terms are available and the loan qualifies on rent with no W-2s or tax returns. The usual result is a lower monthly payment and no maturity date to manage.
This refinance pays off the existing loan and closing costs without pulling significant cash. Dover investors use it after a renovation financed with short-term money, when a local bank loan has a balloon payment coming due, or when a seller-financed note is nearing its payoff date.
Because no large cash-out is involved, timing rules are often more flexible than for cash-out refinances, though they still vary by program.
It is also a clean way to move a rental into an LLC-friendly long-term loan if it was originally bought with a short-term product that required personal income documentation.
This example is illustrative and not a quote. An investor bought and repaired a triplex near downtown Dover using a $240,000 interest-only bridge loan costing about $2,200 a month in interest. The three units now rent for $1,050 each, $3,150 in total, and the property appraises at $345,000.
A DSCR refinance of $247,000 covers the payoff and about $7,000 in closing costs, about 72% of value. Estimated principal and interest is about $1,727. With taxes of $230 and insurance of $175, the payment is about $2,132, for a DSCR of about 1.48x, and the balance now amortizes over up to 30 years.
The new loan is slightly larger because it includes closing costs, yet the monthly payment falls because the short-term interest-only cost is replaced by long-term amortizing financing.
| Item | Bridge loan | DSCR refinance |
|---|---|---|
| Balance | $240,000 | $247,000 |
| Monthly debt payment | $2,200 interest-only | $1,727 |
| Taxes and insurance | $405 | $405 |
| Total monthly payment | $2,605 | $2,132 |
| Maturity | Short term | Up to 30 years |
In Kent County, some long-time investors financed rentals with local bank loans on short balloon terms or with seller financing. When the balloon comes due, the choice is to renew on the bank's terms, pay it off or refinance. A DSCR loan qualifies on rent, so it can work even when your personal income has changed since the original loan.
Bring the note, recent statements and a payoff figure. If the note was handled informally between individuals, your Delaware attorney may need time to confirm the lien and its release.
Some bank balloon loans also carry personal income requirements at renewal. Moving to a DSCR loan that qualifies on rent can remove that requirement for investors whose income has changed or is hard to document.
Finish every unit before the appraisal. Leased units with documented rent are the strongest support for value and income. In Dover, comparable sales for small multi-unit buildings can be limited, so give the appraiser a list of improvements, permits and any recent sales of similar duplexes and triplexes in Dover, Milford or Smyrna.
Schedule the appraisal after all trades are finished and the units are clean. An appraiser who sees work in progress may value the property as incomplete or require a re-inspection, which adds time and cost.
Kent County's relatively low tax bills help keep the full payment down, which helps the ratio. Use the current bill, since the statewide reassessment changed values. If the property is inside city limits, include city taxes as well as county and school taxes.
If the reassessment raised your bill sharply, review the notice for errors. An appeal through the county can correct a value that is out of line and help the ratio on this and future refinances.
Delaware's realty transfer tax generally does not apply to a refinance. Expect lender fees, appraisal, title insurance, recording and attorney fees, which can often be included in the new loan if the LTV and ratio allow. Your Delaware closing attorney will confirm the figures.
Ask your current lender for an exact payoff with per diem interest, so the closing statement is accurate and the old lien is released promptly.
If rent does not cover the payment at 1.0x at the loan size you need, options include bringing cash to reduce the balance, a sub-1.0 DSCR program for strong borrowers or raising rents at renewal before refinancing. We will show you what the property supports.
Start early if you are refinancing out of a short-term loan. Give yourself at least several weeks before maturity so an appraisal delay or a document request does not force an extension.
If you own five or more rentals, each 1-8 units, a blanket portfolio loan can refinance them together with one payment and release provisions for future sales.
Combining loans can also simplify bookkeeping and remove multiple maturity dates, which matters for owners who have accumulated rentals one at a time with different lenders.
Send the address, payoff amount, maturity date, rents and estimated value. Our investor loans are business-purpose loans on non-owner-occupied property. Call (877) 298-1001 or use the form below.
It replaces your current loan with a new one, paying off the balance and closing costs, with little or no cash back.
Yes. A DSCR loan can pay off a bank loan with a balloon payment, qualifying on the property's rent.
Up to 80% LTV on some rate-and-term programs, subject to the appraisal and the DSCR test. Maximum LTV can be lower on 5-8 unit buildings and larger balances.
Usually, when replacing an interest-only bridge or hard money loan with long-term financing, though results depend on the loan.
Generally no in Delaware, since title does not change. Expect lender fees, appraisal, title insurance, recording and attorney fees instead.
Yes, with the note, payment history and a payoff figure from the seller.
Yes, across Kent County and the rest of Delaware. We lend in Smyrna, Camden, Wyoming, Milford and the rest of the state.
Several weeks at least. That leaves time for the appraisal, title work and any document requests before the current loan comes due.
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