FINANCING GUIDE
How to Model a Real Estate Refinance
A refinance replaces existing debt and may release equity based on value, NOI and lender constraints.
In this guideWhat the analysis measuresCalculation frameworkUnderwriting reviewHow to use the result
What the analysis measures
Estimate stabilized value and size new debt against LTV, DSCR, debt yield and any cost constraint. The minimum capacity is the realistic loan amount.
Calculation framework
Deduct existing principal, break costs, financing fees, reserves and transaction costs from gross proceeds to calculate net cash released.
Underwriting review
Model the new interest rate, amortization, term and maturity balloon. Refinancing can improve liquidity while increasing later repayment risk.
How to use the result
Include net refinance proceeds in equity cash flow once. Test lower value, lower NOI and higher interest rates before relying on a cash-out assumption.