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Refinance Break-Even
Calculator

Exclude taxes/insurance
P&I on the new refinanced loan
Typically 2-5% of new loan amount
How long until you sell or refi again

When Refinancing Makes Sense

Refinancing has costs — typically 2-5% of loan amount in closing costs. Those costs are only recouped if you hold the loan long enough to save more in lower payments than you spent on closing. That's the break-even point.

Refi makes sense when:

  • You'll hold the property well past break-even (typically 3-7 years)
  • Rate drop is meaningful (typically 0.75%+ for residential, 1%+ for investment property)
  • You're pulling cash out for another investment that earns more than the new rate
  • You need to remove a borrower (divorce, partnership change)
  • You want to switch loan type (ARM to fixed, conventional to DSCR, etc.)

Hidden Refinance Costs

Closing costs are more than just origination fees:

  • Origination fee: 0.5-1% of loan amount
  • Appraisal: $500-1,500 (investment property tends higher)
  • Title insurance: 0.5-1% of loan amount (lender's policy)
  • Attorney/escrow: $500-1,500
  • Recording fees: $100-300
  • Survey: $400-800 if required
  • Prepaid interest: partial month interest at closing
  • Tax/insurance escrow: 2-6 months of property tax and insurance (not technically cost, but cash needed at closing)

Cash-Out Refinance Considerations

Cash-out refinances are evaluated differently because you're extracting equity. The break-even analysis still applies for the rate change portion, but you also need to consider:

  • What you do with the cash: if you invest it at a higher return than the new rate, cash-out makes sense even with closing costs
  • Cash-out LTV limits: typically 70-75% LTV max on investment property cash-out
  • Cash-out adds payment burden: larger loan = larger monthly payment, reducing cash flow
  • Seasoning requirements: some lenders require 6-12 month seasoning post-purchase before cash-out

Refinance Strategies For Investment Property

Investment property refinance is different from residential:

  • Refi from bridge to DSCR: common BRRRR strategy — stabilize property, then refi from bridge to long-term DSCR at lower cost
  • Refi from rehab loan to long-term: after stabilization, get out of expensive short-term debt
  • Portfolio refi: consolidate multiple properties into one blanket loan for better terms
  • Rate-and-term refi: just lower the rate without pulling cash — fastest underwriting

Frequently Asked Questions

What's the break-even rule of thumb?

A common rule: if you'll hold the loan for more than 3 years past break-even, refinancing usually makes sense. Less than 1 year past break-even? Usually doesn't. Between 1-3 years is a judgment call based on rate environment and personal situation.

Should I refi if rates drop only 0.25%?

Usually no. With typical closing costs, you need 0.5-0.75%+ rate drop to make break-even reasonable on a 30-year hold. Smaller drops only make sense for very large loans where small percentages translate to meaningful dollars.

Can I refinance an investment property as easily as a primary residence?

No — investment property refi has stricter requirements: typically 25% equity minimum (vs 20% for primary), higher rate (typically +0.5-1%), higher reserves required (6-12 months PITI), and full income documentation. DSCR refi simplifies some of this.

How long is the refi process?

Investment property refi typically takes 30-45 days from application to closing. Cash-out refi often takes longer (45-60 days) due to additional underwriting. Rate-and-term refi is fastest.

Can I roll closing costs into the new loan?

Yes — most refinances allow rolling closing costs into the loan balance ("no-cash-out closing costs"). You don't pay out of pocket, but you finance the closing costs over 30 years at the new rate. Often makes sense if you have the equity.

Looking To Refinance An Investment Property?

Our marketplace places investment property refis across 30+ capital sources — DSCR, conventional, portfolio, and bridge-to-perm structures.

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