Government-backed loan program
Popular mortgage loan option
HELOC vs Cash-Out Refi: Best Way to Tap Your Home Equity
Compare HELOCs and cash-out refinancing to find the best way to access your home equity for renovations, debt consolidation, or other needs.
Feature-by-Feature Comparison
See how HELOC and Cash-Out Refinance stack up
| Feature | HELOC | Cash-Out Refinance |
|---|---|---|
| How It Works | Revolving credit line | New mortgage replaces old one |
| Interest Rate | Variable (usually higher) | Fixed (new mortgage rate) |
| Existing Mortgage | Stays the same | Replaced with new loan |
| Closing Costs | Low or none | 2-5% of loan amount |
| Access to Funds | Draw as needed | Lump sum at closing |
| Best For | Ongoing expenses, renovations | Large one-time expenses |
Which Loan Is Right for You?
Each loan type has ideal scenarios
The Bottom Line
If you have a low existing mortgage rate, a HELOC lets you keep it while accessing equity. If your current rate is high, a cash-out refinance lets you lower your rate and access equity simultaneously. Consider your timeline, rate environment, and how you plan to use the funds.
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Frequently Asked Questions
Common questions about HELOC vs Cash-Out Refinance
Frequently Asked Questions
Yes, a HELOC is a second lien on your property. You keep your first mortgage and add the HELOC as a separate credit line.
This comparison is for informational purposes only and does not constitute financial advice. Rates, terms, and program availability are subject to change without notice and may vary based on creditworthiness, property type, loan amount, and other factors. Contact NMHL for current rates and personalized loan options. NMHL NMLS# 2557591. Equal Housing Lender.