In the example above, if your payment due was $1,100.....then $1,000 goes to the interest due and the extra $100 reduces your loan balance to $99,900, so......The following month, 1% of $99,900 is $999....so that amount goes to interest for the month and the rest of your $1,100 payment, $101, goes toward principal, lowering your loan balance to $99,799....and so on and so on. 

If repaid on time, there is no early distribution penalty or taxes.If the plan is to take retirement funds as a distribution and not pay back, then there's going to be a number of factors that will determine the tax treatment (example: if you're still employed, if it's a 401k with current employer, current financial situation, your age, what the funds are used for, etc...).A financial advisor or tax professional with all your specific details should be able to help provide a plan to reduce your taxes and penalties accordingly.

If you reduce your rent rolls, its going to kill your exit valuation, hurt financing, etc.

I probably has some language reducing the coverage if the property is Vacant or Unoccupied for ___ days.

Normally, the whole point of the refi is to reduce your payments it should your dti get within range. 

Private debt (no equity) would greatly reduce YOUR cost of capital and increase your upside in a small deal.

Under this scenario, would you just wait until they move out to reduce liability?

The previous owners gave one tenant reduced rent in exchange for him doing small jobs and being on call for maintenance.

Now a lot of buyers are realizing that this isn't going to be a short nor quick bounce, so they are starting to underwrite a bit more realistically, which is resulting in prices lower than sellers are willing to accept--meaning transaction velocity is reduced to nearly zero. 

However i just refinanced (before really looking into real estate at all) and got a loan for $183000 reducing the interest rate by 1.75% to 3.5%.