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Casual Articles - Understanding Loan-to-Value Ratio (LTV) and Debt Service Coverage Rate (DSCR)
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What is Debt Service Coverage Rate (or DSCR)?
The DSCR approaches the mortgage picture from an entirely
When They Catch You Off-Guard Questions like how much money you spend monthly, your employment history and what bank accounts you have and in what condition, often make you feel a little invaded. What the lender wants to know
The LTV is very important in determining the amount of capital that can be obtained to finance a given property. LTV relates the principle portion of a mortgage to the appraised value of a property. This LTV is very similar to collateral discounting as it serves to protect the lender's debt stake in the property.
LTV = Amount of Loan / Value of Property
The lender will determine an LTV value based on factors such a financial history of the business, credit scores, length of loan, etc. After which, the lender will multiply the LTV by the appraised property value to determine the maximum loan amount that can be given to a borrower.
Amount of Loan = Value of Property * LTV
Clearly, without other considerations the borrower benefits from a higher LTV ratio.
What is Debt Service Coverage Rate (or DSCR)?
The DSCR approaches the mortgage picture from an entirely
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LTV = Amount of Loan / Value of Property
The lender will determine an LTV value based on factors such a financial history of the business, credit scores, length of loan, etc. After which, the lender will multiply the LTV by the appraised property value to determine the maximum loan amount that can be given to a borrower.
Amount of Loan = Value of Property * LTV
Clearly, without other considerations the borrower benefits from a higher LTV ratio.
What is Debt Service Coverage Rate (or DSCR)?
The DSCR approaches the mortgage picture from an entirely
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The lender will determine an LTV value based on factors such a financial history of the business, credit scores, length of loan, etc. After which, the lender will multiply the LTV by the appraised property value to determine the maximum loan amount that can be given to a borrower.
Amount of Loan = Value of Property * LTV
Clearly, without other considerations the borrower benefits from a higher LTV ratio.
What is Debt Service Coverage Rate (or DSCR)?
The DSCR approaches the mortgage picture from an entirely
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Amount of Loan = Value of Property * LTV
Clearly, without other considerations the borrower benefits from a higher LTV ratio.
What is Debt Service Coverage Rate (or DSCR)?
The DSCR approaches the mortgage picture from an entirely
Personally, I am not fond of the whole interviewing process. Unfortunately it’s a necessary part of growth, which I am fond of. It definitely is easier if you have a procedure that you follow when interviewing people for a position in you
What is Debt Service Coverage Rate (or DSCR)?
The DSCR approaches the mortgage picture from an entirely different angle than the LTV. Where the LTV determines the loan amount based on the value of the property, the DSCR bases upon the cash flow of the property and/or borrower.
DSCR = Debt Service / Cash flow
The debt service is usually taken as an annual figure that includes both repayment of principle and interest payments for a given year. Cash flow is calculated by taking adding noncash expenses back to net income such as depreciation.
Once again, the lender will use factors such as business credit, industry risk, etc. to call a figure for DSCR. Usually this will be around 1.20. After which, the total debt service is calculated and a total loan amount derived from it.
Debt Service = Cash Flow * DSCR
Without other cons
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