Short-term money is how many Frederick County rentals get bought: a private lender for a quick close in Brunswick, hard money for a rowhome rehab, a bridge to beat other offers. A rate-and-term refinance is how those loans get retired before the maturity date arrives.
In short: LendingStreet offers DSCR rate-and-term refinances on 1-8 unit rentals in Frederick and across Frederick County to pay off hard money, private notes, bridge loans or existing mortgages. The loan qualifies on the property's rent, goes up to 80% LTV on some programs, uses a 1.0x standard minimum DSCR and a 620 minimum credit score, and offers 30-year terms.
Brunswick, Walkersville and Thurmont attract investors because prices are lower than in the city or Urbana, and many of those purchases are made with private or hard money for speed. In downtown Frederick, investors often use rehab loans on rowhomes and need permanent financing once tenants move in. Others hold older loans with adjustable terms and want a predictable long-term payment.
A rate-and-term refinance pays off the existing debt and closing costs, with little or no cash back. Because no equity is being pulled out, leverage can be higher than on a cash-out, up to 80% LTV on some programs.
The common thread is a loan that was right for buying but wrong for holding. Private and hard money are expensive to carry month after month, and an adjustable bank loan can reset at an awkward time. Moving to a long-term payment qualified on rent lets the property stand on its own cash flow, which is the reason to own a rental in the first place.
This example is illustrative and not a quote. An investor bought and updated a single-family home in Brunswick, a short walk from the MARC station, with a private loan that now has $248,000 due. The home appraises at $360,000 and leases for $2,350 a month. Taxes are about $330 a month and insurance about $100.
The private note is interest-only at about $2,273 a month, or about $2,703 with taxes and insurance. A DSCR loan of $255,000, about 71% of value, pays off the note and closing costs. Estimated principal and interest on a 30-year term is about $1,740, the total payment about $2,170 and the DSCR about 1.08x.
The move from an interest-only private note to an amortizing loan also starts building equity with every payment, which helps the next time you refinance or sell. And because the new loan is long-term, you are no longer exposed to a private lender deciding not to extend.
| Item | Private note | DSCR refinance |
|---|---|---|
| Balance | $248,000 | $255,000 |
| Structure | Interest only, due soon | 30-year amortizing |
| Monthly principal and interest | $2,273 | $1,740 |
| Taxes and insurance | $430 | $430 |
| Total monthly payment | $2,703 | $2,170 |
| DSCR at $2,350 rent | 0.87x | 1.08x |
Maryland generally charges recordation tax on a refinance only on new money above the unpaid balance of the existing loan when the same owner refinances. On a rate-and-term refinance, where the new loan mostly replaces the old one, that can keep recordation costs low. Rules depend on who the borrower is and how the existing loan is held, so ask your title company to confirm before closing.
A few steps help the appraisal and underwriting go smoothly:
If the home was renovated, make sure the work is permitted and closed out. Appraisers and title examiners can find open permits, and resolving them late can delay closing past the maturity date on your existing loan.
Start at least 60 days before the existing loan matures. Appraisals in Frederick County can take a couple of weeks to schedule, and older properties may raise questions that take time to answer. If you bought recently, programs differ on how soon they will use the new appraised value instead of your cost basis, so keep purchase and renovation records handy.
Ask your private or hard money lender for a written payoff statement early, including any per diem interest and fees, so the title company can prepare the closing figures. Surprises in the payoff amount are one of the most common reasons refinances slip.
Brunswick, like other incorporated towns, adds a town tax rate to the county rate, and the City of Frederick does the same. Maryland reassesses properties every three years with increases phased in, and investors do not get the Homestead Tax Credit. Use the current bill and the phased-in assessment when estimating your payment.
Some Frederick landlords financed rentals with local banks on loans that adjust or balloon after a few years. A DSCR rate-and-term refinance can replace that with a 30-year term qualified on rent, without the business tax returns a bank renewal often requires.
Because the loan qualifies on rent, the refinance also avoids the annual financial reporting some bank loans require.
If you want equity out, a cash-out refinance goes up to 75% LTV, though in Frederick the rent coverage often limits the cash first. If you only need to retire the existing debt, rate-and-term allows higher leverage on some programs and usually keeps the ratio stronger.
Many Frederick investors use both over time: a rate-and-term refinance to retire short-term debt right after a renovation, then a cash-out a few years later once rents have grown and the ratio has more room. Planning that sequence now helps you choose the right loan amount today and keeps the next step open.
Our investor loans are business-purpose loans on non-owner-occupied property. Send the address, payoff amount and due date, value estimate and lease through the form below. For other Maryland markets, see our Maryland rate-and-term page.
Yes. The new DSCR loan pays off the private lender at closing.
Up to 80% LTV on some programs, covering the payoff and closing costs.
Maryland generally taxes only new money above the existing balance when the same owner refinances. Your title company can confirm.
A signed lease at market rent is best. Some programs can use market rent on a vacant property.
Pre-1978 rentals generally must be registered and inspected at turnover. Keep your certificate current.
It varies by program, particularly on whether the new value or your cost basis is used.
At least 620. Higher scores can improve terms.
Yes. We finance 1-8 unit rentals and combine all units' rents for the DSCR.
2-3 competing quotes from 30+ capital sources. No credit pull. No commitment.
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