A new rental loan should earn its place
Restructuring debt is a decision with a price. This page is the math that says whether the replacement deserves the fee.
Business-purpose investment financing. Stonehaven Lending is a mortgage brokerage. Subject to lender underwriting, documentation, valuation and program availability. Preliminary review is not approval or a commitment. NMLS #1752355.
A rate-and-term refinance replaces the current rental loan with a new one without meaningful cash out: the point is structure, payment, term or product change rather than proceeds. Qualification runs on eligible rent against the new qualifying payment (PITIA). The relevant limitation: closing costs are certain and savings are conditional, so the decision lives in the break-even math and the remaining hold period, not in the monthly payment alone.
An illustrative restructure decision
An owner carries a rental loan with a payment structure that no longer fits the hold plan. The proposed refinance changes the payment and the term; it also costs real fees and may carry new prepayment terms. Whether it earns its place depends on the break-even month against how long the owner will actually keep the property and loan. Illustrative example, not a customer.
A refinance that breaks even in year four is a poor purchase for an owner planning to sell in year two.
Replace, keep, or wait
Keeping the current loan costs nothing today and preserves known terms. Replacing it can fix a structural problem: a payment that will change, a maturity approaching, a product mismatch with the hold plan. Waiting is legitimate when neither pressure exists.
This page is deliberately not about accessing equity; that comparison, with its different rules and economics, lives on the cash-out page. Keeping the two decisions separate keeps both honest.
The break-even worksheet
Six lines decide a rate-and-term refinance. Illustrative structure; the review fills real numbers:
| Line | Keep the current loan | Refinance |
| Monthly payment (PITIA) | Known | Proposed |
| All-in closing costs | None | Itemized, certain |
| Monthly difference | Baseline | Payment change, if any |
| Break-even month | Not applicable | Costs divided by monthly difference |
| Expected remaining hold | Your plan | Same plan, tested against break-even |
| Prepayment terms | Existing note's | New note's, including any new exposure |
Beyond the ratio
Rental income treatment is one input. These commonly shape eligibility and terms as well:
- Eligible rent at today's evidence against the new payment
- Seasoning and refinance-classification rules
- Credit, leverage and reserves
- Prepayment terms on both notes
- Appraisal at current value
Asked before anyone proceeds
Rates and payments are not published here; how do I compare?
Deliberately so: volatile numbers do not belong on a static page. The comparison uses your actual quotes at review time, itemized, against your actual current note. The worksheet's structure is the constant.
The new payment is lower; is that not the answer?
Only with the costs and the calendar attached. Lower payment, real fees and a longer effective horizon can still lose to keeping the loan. Break-even against the hold answers it.
How the preliminary review works
Send the scenario
Property numbers, rough credit picture, cash position and timing. Estimates are fine to start; no SSN is collected at this stage.
Compare the paths
A licensed specialist reviews the scenario and compares the financing structures that actually fit it, including when a different product or waiting is the better answer.
Underwriting decides
If you proceed, a lender underwrites the full file. A preliminary review is analysis, not approval, and no closing timeline is promised here.
Put the scenario in front of a specialist
Rough numbers are enough to start. The review compares the paths that actually fit, and says so when a different one wins.
Business-purpose investment financing. Stonehaven Lending is a mortgage brokerage. Subject to lender underwriting, documentation, valuation and program availability. Preliminary review is not approval or a commitment. NMLS #1752355.
Specific to this situation
What counts as rate-and-term versus cash-out?
Classifications turn on proceeds and payoff structure, and each carries different rules on leverage and seasoning. The review classifies the scenario before comparing, because the classification changes the rules being compared.
Do prepayment terms on my current loan matter?
Yes, twice: any exit cost on the current note belongs in the refinance cost total, and the new note's prepayment terms belong in your future flexibility. Both are itemized in the review.
Does the property need to re-qualify?
Yes: the refinance is a new loan, sized on today's eligible rent, today's appraisal and current program rules. A property that qualified years ago is not automatically the same file today.
When is waiting the right call?
When no structural pressure exists (no payment change coming, no maturity, no product mismatch) and break-even math is marginal. A review that says wait is doing its job.
Can I fold a small amount of cash into a rate-and-term?
Classification rules define how much incidental cash keeps rate-and-term treatment; beyond it, cash-out rules apply. Where your scenario lands is a rules question the review settles.