The usual Providence story goes like this: buy a tired two- or three-family with a short-term loan, renovate it, pass the lead inspection and sign new leases. Then the short-term loan comes due. A rate-and-term refinance is how that building moves onto long-term debt.
In short: LendingStreet offers DSCR rate-and-term refinances on 1-8 unit rentals across the Providence metro, paying off hard money, bridge loans or an existing mortgage with a long-term loan that qualifies on the property's rent. Rate-and-term refinances go up to 80% LTV on some programs, 30-year terms are available, the minimum credit score is 620 and LLC borrowers are standard. No W-2s or tax returns are required.
A rate-and-term refinance replaces your current loan without taking extra cash out, beyond small amounts allowed by some programs. In the Providence metro it is most often used in three situations.
This example is illustrative and not a quote. An investor finished renovating an Olneyville three-family bought with a short-term loan. The balance is $430,000, with interest-only payments of about $4,300 a month. The building now appraises at $600,000, and the units lease for $1,650, $1,700 and $1,750.
The new DSCR loan covers the payoff plus about $12,000 in closing costs, for a loan of $442,000, about 74% of value. Estimated principal and interest is about $3,015. With $980 in taxes and $320 in insurance, the payment is about $4,315, and DSCR is about 1.18x. Before the refinance, the same building cost about $5,600 a month with no principal paid down.
| Item | Short-term loan | New DSCR loan |
|---|---|---|
| Loan balance | $430,000 | $442,000 |
| Monthly loan payment | $4,300 interest-only | $3,015 principal and interest |
| Taxes and insurance | $1,300 | $1,300 |
| Total monthly cost | $5,600 | $4,315 |
| Term | Short-term, due soon | Up to 30 years |
| DSCR at $5,100 rent | 0.91x | 1.18x |
Start the refinance before your short-term loan matures, not after. In Providence the steps that take longest are usually outside the lender's control: the final permit sign-offs, the lead inspection and certificate, and getting each unit leased. If your short-term loan has an extension fee, a few weeks of planning can save it.
Apply once the work is complete and at least most units are leased. The appraiser will want to see finished units, and the DSCR is strongest with signed leases at market rent.
Rate-and-term refinances can reach 80% LTV on some programs, so your new appraised value matters. If the renovation added real value, the refinance can often pay off the entire short-term balance and closing costs. If the value came in lower than expected, you may need to bring cash to close or accept a lower loan amount.
Rent sets the other limit. On a three-family, all three leases count together. A building with one unit still empty may need to wait until it is leased or use the appraiser's market rent where the program allows.
A refinance file here usually includes a few items that are particular to the city and the state. Gather them during the rehab rather than at the end.
Not every rate-and-term refinance follows a rehab. Some Providence owners refinance an older loan to move from an adjustable payment to a fixed one, to extend the term and lower the monthly payment, or to move a property from their own name into an LLC. Whether it makes sense depends on the balance, the new terms and the closing costs, so we show the before-and-after payment on every quote.
A longer term can make a real difference on buildings where owner-paid heat or water eats into cash flow. Spreading the balance over 30 years lowers the monthly payment and gives the building more room to absorb a cold winter or a vacancy.
If the new value supports a loan well above your current balance and you want cash for the next project, a cash-out refinance may fit better, up to 75% LTV. If you just need to retire the short-term loan at the highest leverage the program allows, rate-and-term is usually the right choice. Seasoning rules can differ between the two, so ask which applies to your timeline.
The same renovated three-family can refinance quite differently depending on which side of a city line it sits on. Providence, Pawtucket, Cranston and East Providence each set their own tax levels, and Providence's higher non-owner-occupied class can make its DSCR tighter than a similar building in a neighboring town. Rents differ too: units near the universities, the hospitals and downtown lease for more than those farther out.
Before you start a rehab with a refinance exit, check the tax bill you will carry as an investor and the rent the finished units can actually command in that neighborhood, then run the DSCR at the loan amount you need to pay off the short-term lender.
Send the address, current balance, maturity date, rents and the renovation summary through the form below, or call (877) 298-1001. We will size the loan and show the DSCR at your expected value.
It replaces your current loan with a long-term DSCR loan, without taking significant cash out. It qualifies on the property's rent rather than your personal income.
Yes. Paying off hard money or fix and flip loans after a renovation is one of the most common uses.
Up to 80% LTV on some programs. The rent also has to cover the new payment at the program minimum.
For most pre-1978 Providence rentals, a lead certificate is required to rent legally, so lenders typically expect it in the file.
Apply as early as possible with leases and permits ready. Waiting until the maturity date can mean extension fees. If units are still being leased, ask whether a short bridge extension or the appraiser's market rent on vacant units could close the gap.
Yes. LLC borrowers are standard, and many Providence investors use a rate-and-term refinance to move a rental bought in their own name into an LLC. Talk to your attorney about the deed transfer before you apply.
The minimum credit score is 620.
No. Our investor loans are business-purpose loans on non-owner-occupied property.
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