The current 30-year mortgage rate of 6.09% and 10-year Treasury yield of 4.24% indicate a relatively high interest rate environment. For DSCR underwriting, this means lenders will be more stringent in ensuring sufficient rental income coverage. Higher rates necessitate stronger cash flow from properties to meet debt obligations, potentially requiring higher reserves and more robust rent projections to maintain favorable DSCR ratios.
For fix-and-flip investors, the spread between acquisition costs and resale prices becomes critical. Elevated mortgage rates can compress profit margins, making precise cost management essential. Increased borrowing costs may lead to tighter draw schedules, necessitating careful planning and execution. Contingency reserves should be prioritized to mitigate unforeseen expenses and market fluctuations.
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Note: For informational purposes only. Not financial advice. Terms subject to change and underwriting approval.