Interest Rates Are Dropping—Here’s How Brokers Can Leverage Refinancing

With the first interest rate cut of 2025, more and more investors will be looking to take advantage of refinancing existing loans to lower monthly payments on their real estate portfolios. Aside from improving returns, refinancing also provides investors with the capital they need to make new property acquisitions. For brokers and lenders, this presents a great opportunity to capitalize on the refinancing boom that’s set to come. Offering a variety of financing options, including refinance loans, ensures that you can meet the needs of these investors and grow your business.

Interested in learning more? Read on for our guide on how brokers can leverage refinancing to provide more value to investors and close more loans in the coming months.

The Impact of Lower Interest Rates on the Market

In today’s highly competitive market environment, rate drops tend to have a massive impact on mortgage applications. Just this week, even before the Fed decision to lower rates, mortgage refinances jumped 60% from the week prior in anticipation of rate cuts. That’s because for rental properties, where profit margins can be fairly thin, even a small drop in interest rates can significantly improve cash flow.

Rate drops can also act as a catalyst for portfolio growth. Better cash flow means borrowers can recoup their initial investments faster, and move forward with plans to acquire new properties sooner.

The Benefits of Refinancing for Investors

When discussing refinancing with your investor clients, be sure to highlight some of its biggest advantages:

1. Lower monthly payments and improved ROI: As we mentioned, refinancing can be one of the simplest ways to reduce monthly payments and boost cash flow with rental property investments.

1. Access to Equity: Cash-out refinances allow investors to utilize the equity they’ve built to grow their portfolios, without having to dip into personal finances.

1. Debt Consolidation: By combining multiple properties into a portfolio loan, investors simplify and often reduce their monthly payments.

When Does Refinancing Make Sense?

There are some key indicators you can refer to that will tell you when it’s time to recommend a refinance loan to a client. For instance, if your client can secure an interest rate of at least 0.5% less than what they currently pay, you should at least run the numbers to see how much they could be saving. A property that has appreciated in value can also be ideal for refinancing, as a refinance loan allows them to utilize those gains effectively. It’s also important to keep an ear to the ground in regard to market conditions. If you’re expecting rates to increase, you should recommend a client refinance immediately to lock in a favorable rate.

How Brokers Can Position Themselves as Trusted Advisors

As a lending partner, you should strive to be a trusted source of investment advice for clients, not just another source of financing. Take time to educate your clients on the benefits of refinancing, and how important it is to take advantage of current market conditions before they change. Walk through the numbers with them and highlight how a refinance loan can save them money and better position them for success. Finally, partner with wholesale lenders who specialize in refinance loans for investors. Private lenders who are established in the real estate space understand the needs of these investors, and can offer benefits over conventional loans like speed, flexibility, and less stringent underwriting criteria.

Common Pitfalls to Avoid

Although refinancing can be a great way to improve portfolio returns, it’s not a one size fits all solution, and there are still things to watch out for. First, be sure not to overlook the closing costs and fees associated with a loan, as they can offset the saving gained by refinancing. Another thing to consider is prepayment penalties, which might kick into effect if the borrower has existing debt on their property. Most of all though, take care that a refinance aligns with the investor’s long-term strategy. If a borrower plans to sell their property soon, for example,refinancing might not make much sense for them. Discuss loan terms in detail with your clients, and ensure that they understand the benefits and drawbacks of the loan before signing on the dotted line.

Actionable Steps for Brokers

So, how can you position yourself for success and start closing more deals with refinance loans? It starts by partnering with a trusted lending partner that offers refinancing for investors. Choose a lender that has experience with real estate investments, and a proven track record of helping investors maximize portfolio returns. Then, review your client’s portfolios to see where a refinance loan might lead to cost saving opportunities. Once you have done that, reach out proactively with personalized saving scenarios that highlight how these clients can benefit from a refinance. Finally, make use of your marketing channels, including email lists and social media, to get the word out about the cost saving opportunities that come with refinancing.

RCN Capital

Just as important as the programs you offer is the wholesale lender you choose to partner with. If you want to help your clients maximize the returns on their next investment, choose a lender that can provide you with the best leverages and rates. RCN Capital works with real estate professionals, commercial contractors, developers & small business owners across the nation. We provide short-term fix & flip financing, long-term rental financing, and new construction financing for real estate investors and lending partners. If you are looking to offer refinancing programs to your clients, RCN Capital has competitive loan options and an award-winning broker referral program available to partners.