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Refinance vs Sell Calculator

Enter your home value, mortgage and rent details to compare selling versus refinancing.

How it is calculated

The tool compares two outcomes. Selling: net proceeds = value − value × sell cost % / 100 − balance. Refinancing and renting out: the current balance is refinanced at the new annual rate over the new term, with r = rate / 100 / 12 and n = years × 12:

payment = balance × r / (1 − (1 + r)−n) and monthly cash flow = rent − payment, times 12 for the annual figure.

If the rate is 0 the payment is simply balance / n. The selling cost defaults to 6% of value when left empty. Only mortgage principal and interest are deducted from the rent: property tax, insurance, maintenance, vacancy and refinancing fees are not included, and neither is any cash-out amount. Selling costs and tax rules differ by country.

Worked example

A home worth 400,000 has a 250,000 mortgage balance. Selling at 6% costs 24,000, so net proceeds are 400,000 − 24,000 − 250,000 = $126,000.00. Alternatively, refinance 250,000 at 6.5% for 30 years: r = 0.005417, n = 360, giving a payment of $1,580.17. With rent of 2,600 the monthly cash flow is 2,600 − 1,580.17 = $1,019.83, or $12,237.96 a year, before any costs the tool does not model.

Try this example →

Common mistakes

  • Treating the monthly cash flow as profit; property tax, insurance, repairs and vacancy months still have to come out of it.
  • Comparing the lump sum with one year of cash flow. The sale proceeds can be invested, and the rented home keeps building equity, so compare over a multi-year horizon.
  • Entering the rate as a decimal such as 0.065 instead of 6.5.
  • Entering the original loan amount instead of the current balance.
  • Leaving the selling cost at the 6% default when your agent fees, transfer taxes and closing costs differ.

About this calculator

This calculator lines up two paths for a homeowner side by side: selling now — sale price minus selling costs and the remaining mortgage balance, giving net cash proceeds — versus refinancing and renting the property out, which trades that lump sum for an ongoing net rental cash flow (monthly rent minus the new principal-and-interest payment on your current mortgage balance; taxes, insurance, maintenance, cash-out and refinancing fees are not included, so subtract those yourself).

Homeowners relocating for a job, and real estate investors deciding whether to convert a primary residence into a rental instead of cashing out, use this comparison to see whether the immediate lump sum from selling outweighs the cumulative cash flow and equity growth of holding and refinancing instead.

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