CalculateRealEstateROI

Financing

When does a refinance make sense?

When rate drop × loan balance × hold period covers closing costs in under 24 months.

Reviewed by Keiron Brown, Founder & Editor, CalculateRealEstateROI · Educational estimates only — not investment, financial, tax, or legal advice

Direct answer

When rate drop × loan balance × hold period covers closing costs in under 24 months.

Expanded explanation

Rules of thumb: 75bps drop with 5+ year hold usually clears. Cash-out refis change the math because the new cash is also redeployable. Always model net deployment yield.

Examples

  • $300k loan: 1% drop = $3,000/yr savings; $6k closing = 24-month breakeven.

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