Why prepayment penalties matter
Some DSCR programs may offer different pricing depending on prepayment penalty structure. A lower payment can help DSCR, but a longer penalty may not match every investor plan.
- Hold period matters: a short flip-to-rent plan may need flexibility.
- Cash-out refinance plans should consider future exit timing.
- Compare total cost, not rate alone.
Questions to ask
Ask whether the penalty is step-down, fixed, yield-maintenance style, or unavailable in the state/property type being reviewed. Requirements vary by lender and scenario.