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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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Comments (1)

  • Editorial team

    To compare a lump sum with a monthly flow, divide the net sale proceeds by the annual cash flow. In the guide's example, 126,000 against 12,237.96 a year is roughly 10 years of rent to match the sale, before taxes, repairs and vacancy shrink that cash flow. The longer that gap, the more the decision rests on how much you expect the property to appreciate. How long would you be willing to hold?

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