BRRR refinance - Rolling Origination + Processing into loan

[William Barr]

Hello! I am looking to lower the cost of closing on the refinance of my BRRR deals. Right now I am using 80% LTV to refi and paying separate origination and processing fees at closing. My question is, would it be beneficial to reduce my LTV refi to say 78% and then use my remaining debt capacity (up to 80% total) to roll in these closing fees? Example:

A)

Purchase Price: $150,000

Rehab: $50,000

ARV: $250,000

80% LTV refi: $200,000

Closing fees: $5,000

Equity created: $50,000 (20% x $250,000)

Cash left in deal: $5,000 (closing fees)

B)

same info as above except;

78% LTV refi: $195,000

Closing fees added to refi: $5,000

Equity created: $55,000 (22% x $250,000)

Cash left in deal: 0

Or should the equity created in B) be 20% because we are still leveraging net 80% total debt (78% loan + 2% closing)? Either way, am I getting the same return or better with no cash left in the deal by going B) - what am I missing here?

Thanks!