Compare your options for accessing home equity
Step 1: Access
Max Equity Available
$100,000
Step 2: Need
$50,000
Step 3: Debts to consolidate
Add balances you'd pay off with the draw. Edit names, rates, or add rows for extra cards.
Compare
Monthly Payment
Current
$2,026
baseline
HELOC
$2,460
+$434
Cash-Out
$2,329
+$303
HELOC | Cash-Out | |
|---|---|---|
| Rate | 8.50% | 7.00% |
| Blended rate weighted across debt | 6.79% | 7.00% |
| Total interest life of loans* | $362K | $488K |
| Upfront cost | $2,000 | $5,250 |
Checking today’s rate…
That average anchors the cash-out rate only. HELOC pricing is prime plus a margin, which this source doesn’t publish, so the HELOC column stays on our own rate card — adjust either with the arrows above.
HELOC wins — 6.79% blended vs 7.00% cash-out.
A HELOC keeps your first mortgage; a cash-out replaces it — that difference matters most when your current rate is low. Today’s rates →
Altgage Inc. NMLS #2447252 | 100 Cambridge St, Floor 14, Boston, MA 02114|Both let you tap home equity, but they're fundamentally different products. A HELOC is a credit line you draw from as needed at a variable rate; a cash-out refi replaces your mortgage with a bigger one at a fixed rate. The right choice depends on whether you need cash now or over time, and whether you want to touch your existing mortgage.
You want flexibility — draw $20K now, $30K next year, pay it back, redraw. You're financing a long renovation in stages. Your existing mortgage rate is meaningfully below current rates and you don't want to lose it. Funding is also faster (1–2 weeks vs 2–3 weeks for cash-out).
You need a single lump sum (debt consolidation, business buy-in, large one-time purchase). You want a fixed rate and predictable payment. Your existing mortgage rate is near or above current rates anyway. You need the full 80–85% of your home's value.
HELOCs are variable — your rate moves with Prime, and most HELOCs are interest-only for the first 10 years before amortizing rapidly. Surprise payment jumps catch people. Cash-out refis reset your loan term and can add years of interest you'd already paid down. Match remaining term when possible.
Up to 80% combined LTV, both options are competitive. Above 80% gets ugly — cash-out refis require PMI again; HELOC rates spike. If you need more than 80%, the right answer is sometimes "borrow less" rather than "pay punitive pricing for the last few percent."
Three ways to convert equity into cash, and the differences are structural rather than cosmetic.
HELOC — a revolving line behind your first mortgage, variable rate, draw as needed. Best when you need money over time and want to keep a low first-mortgage rate.
Home equity loan — a fixed-rate lump sum, also a second lien, repaid on a fixed schedule. Best when you need a known amount now and want payment certainty. It’s the option people mean when they say “second mortgage.”
Cash-out refinance — replaces your first mortgage with a larger one. Best when your current rate is at or above market anyway, since you’re giving it up regardless.
The deciding question is usually your existing rate. Below market, a second lien of either kind protects it. At or above market, the cash-out consolidates everything into one payment and may improve the rate at the same time.
It usually comes down to your current mortgage rate. If it’s meaningfully below market, a HELOC keeps it intact while a cash-out refinance replaces it at today’s rate. If your rate is at or above market you’re giving it up either way, and a cash-out often wins on rate and simplicity.
A HELOC is a revolving line at a variable rate that you draw from as needed; a home equity loan is a fixed-rate lump sum repaid on a set schedule. Both sit behind your first mortgage. Choose the line for flexibility and the loan for payment certainty.
Yes, though combined loan-to-value limits still apply across both. Lenders generally cap total borrowing at 80–85% of the home’s value regardless of how many liens produce it, so having one reduces what the other can offer.