Cash-Out Refinance or HELOC: Which Is Better for You?

When homeowners need access to cash, they may consider using the equity in their home through either a cash-out refinance or a home equity line of credit (HELOC). Both options allow homeowners to access funds, but there are important differences to consider before choosing which one is right for you.

A cash-out refinance involves refinancing your current mortgage for a larger amount than you currently owe, and then receiving the difference in cash. The new mortgage replaces your old one and often has a fixed interest rate. This option is best if you need a lump sum of cash for a specific purpose, such as home renovations, debt consolidation, or a major purchase.

On the other hand, a HELOC is a line of credit that allows you to borrow against your home’s equity without refinancing your existing mortgage. You can borrow and repay the funds as needed, up to a predetermined credit limit. This option is best for ongoing expenses or unpredictable needs, such as home repairs or medical bills.

In this blog, we will provide a detailed comparison of cash-out refinances and HELOCs, including their pros and cons, interest rates, fees, and eligibility requirements. By understanding the differences between these two options, you can make an informed decision about which one is best for your financial situation.

Understanding Cash-Out Refinancing: Definition

A cash-out refinance and a home equity line of credit (HELOC) are two methods for homeowners to access the equity in their homes.

A cash-out refinance involves refinancing your existing mortgage for an amount greater than what you currently owe, and then taking the difference in cash. For example, if your home is worth $300,000 and you owe $200,000 on your mortgage, you could refinance for $250,000 and receive $50,000 in cash. This cash can be used for any purpose, such as home renovations, paying off high-interest debt, or other expenses.

A home equity line of credit (HELOC) is a type of revolving credit that uses your home’s equity as collateral. Like a credit card, you can borrow and repay as needed up to a certain limit. The interest rate on a HELOC is typically variable and may be higher than a traditional mortgage rate. HELOCs are often used for home improvements or ongoing expenses, such as college tuition or medical bills.

Both options allow homeowners to access the equity in their homes, but there are some key differences. A cash-out refinance involves replacing your current mortgage with a new one, while a HELOC allows you to borrow against your home’s equity without changing your existing mortgage. Additionally, a cash-out refinance typically results in a fixed interest rate, while a HELOC usually has a variable rate.

HELOCs:

• Access to funds: With a HELOC, you have ongoing access to funds that you can borrow and repay as needed, up to a predetermined credit limit.
• Interest rates: HELOCs usually have variable interest rates, which means your payments may fluctuate over time based on changes in the market.
• Fees: HELOCs may come with fees such as an annual fee, closing costs, or early termination fees.
• Eligibility: To qualify for a HELOC, you typically need a credit score of at least 620, a debt-to-income ratio of 43% or less, and at least 20% equity in your home.
• Uses: HELOCs are often used for ongoing expenses, such as home repairs, college tuition, or medical bills.

Cash-Out Refinancing:

• Access to funds: With cash-out refinancing, you receive a lump sum of cash upfront, which you can use for any purpose.
• Interest rates: Cash-out refinancing usually comes with a fixed interest rate, which means your payments will remain the same over the life of the loan.
• Fees: Cash-out refinancing may come with fees such as closing costs, application fees, and appraisal fees.
• Eligibility: To qualify for cash-out refinancing, you typically need a credit score of at least 620, a debt-to-income ratio of 50% or less, and at least 20% equity in your home.
• Uses: Cash-out refinancing is often used for one-time expenses, such as home renovations, debt consolidation, or a major purchase.

Overlap: Cash-Out Refinancing & HELOCs

Cash-out refinancing and HELOCs overlap in that they both allow you to tap into the equity in your home to access cash. Here are a few additional points of overlap:

• Both use your home equity: Both options are secured by your home equity, which means that your home is used as collateral for the loan.
• Both have eligibility requirements: To qualify for either option, you typically need a good credit score, a low debt-to-income ratio, and at least 20% equity in your home.
• Both can be used for home improvements: Both cash-out refinancing and HELOCs can be used for home improvements or renovations, which can increase the value of your home.
• Both have tax implications: Interest payments on both options may be tax-deductible if the funds are used for home improvements. However, it’s important to consult with a tax professional for guidance on your specific situation.
• Both can result in foreclosure: If you default on either loan, your lender can foreclose on your home. Therefore, it’s important to make sure you can afford the payments before taking out either loan.

Differ: Cash-Out Refinancing & HELOCs

Cash-out refinancing and HELOCs differ in several key ways. Here are a few points of difference:

• Access to funds: With cash-out refinancing, you receive a lump sum of cash upfront, while with a HELOC, you have ongoing access to funds that you can borrow and repay as needed.
• Interest rates: Cash-out refinancing usually comes with a fixed interest rate, while HELOCs often have variable interest rates, which means your payments may fluctuate over time based on changes in the market.
• Repayment terms: Cash-out refinancing often has longer repayment terms, while HELOCs typically have shorter repayment terms.
• Fees: The fees associated with each option can differ, with cash-out refinancing often coming with higher closing costs and HELOCs often coming with annual fees or early termination fees.
• Use: Cash-out refinancing is often used for one-time expenses, such as home renovations or debt consolidation, while HELOCs are often used for ongoing expenses or unpredictable needs, such as home repairs or medical bills.

Should I Refinance or Take Out a HELOC?

Whether you should refinance or get a HELOC depends on your individual financial situation and goals. Here are a few factors to consider when deciding which option is right for you:

Your current interest rate: If you have a high-interest rate on your current mortgage, refinancing could lower your interest rate and save you money in the long run. On the other hand, if you have a low-interest rate and don’t want to risk losing it, a HELOC may be a better option.
How much cash you need: If you need a large amount of cash upfront, cash-out refinancing may be a better option. However, if you need ongoing access to cash, a HELOC may be more suitable.
Your credit score: If you have a low credit score, you may have trouble qualifying for a HELOC or getting favorable terms. Refinancing may be a better option in this case.
Fees and closing costs: Both options come with fees and closing costs, so it’s important to compare the costs associated with each option to determine which one is more affordable for you.
Repayment terms: Refinancing often comes with longer repayment terms, which can result in lower monthly payments but ultimately result in paying more interest over time. A HELOC usually has shorter repayment terms, which means you may have to make higher monthly payments but pay less in interest overall.

Related: rocket mortgage heloc, usaa heloc, heloc vs cash out refi, navy federal heloc, cash out refinance vs heloc, heloc vs refinance, heloc chase, navy federal heloc rates, i need cash right now, heloc vs cash out refinance, heloc vs refi cash out, heloc best, pen fed heloc, cash out refi vs heloc, cash out refinance versus heloc, you simply have less value, loandepot heloc, capital one heloc, navy federal credit union heloc, heloc rocket mortgage, heloc best banks, rocket mortgage heloc rates, heloc or cash out refinance, best heloc lenders 2022, home equity line of credit vs refinance, second mortgage vs heloc, rocket mortgage cash out refinance, cash out refinance or heloc, best by vs use by, pros and cons of heloc vs refinance, refinance vs heloc, heloc navy federal, heloc usaa, heloc or refinance, heloc penfed, chase equity line of credit, navy fed heloc, navy federal home equity line of credit, home equity line of credit vs cash out refinance, loandepot heloc rates, should i get a heloc, heloc vs refi, cash access line meaning, chase bank home equity line of credit, heloc vs refinancing, should i get a heloc just in case, what does heloc mean, home equity line of credit navy federal, chase bank home equity loan rates, heloc versus refinancing, refi heloc, refinance a heloc, best banks for refinance, heloc rates navy federal, best heloc bank, heloc mean, heloc va loan, best heloc rates ny, navy federal heloc credit score requirements, does usaa offer heloc, navy federal heloc calculator, does rocket mortgage offer heloc, easiest heloc to qualify for, rocket mortgage line of credit, cash out vs heloc, difference between heloc and refinance, home equity loans chase bank, refi vs heloc, does usaa do heloc loans, heloc versus cash out refinance, what is heloc mean, equity line of credit vs refinance, how to get a better v line, heloc terms length, how does a heloc work for dummies, loandepot home equity line of credit, is it better to refinance or get a heloc, navy fed heloc rates, chase line of credit home equity, faster money loc, capitalone heloc, is it hard to get a heloc right now, do you have to pay off heloc when refinancing, heloc vs cash out, rocket mortage heloc, is a heloc a refinance, chase cash out refinance, heloc vs cash out refinance calculator, lower com heloc, in line vs in line, heloc 2022, does rocket mortgage do helocs, do you have to refinance to get a heloc, better heloc, cash out refi or heloc, best bank to get a heloc, loan pronto credit score requirements, loandepot cash out refinance, old national bank heloc, refinance or heloc, line of credit vs refinance, best heloc loan rates, achieve heloc, difference between heloc and cash out refinance, heloc vs. cash out refi, home improvement loan vs heloc, old national bank home equity loan, cash-out refinance vs heloc, does heloc have to be with same bank as mortgage, capital one heloc rates, home equity loan rates chase bank, best bank for a heloc, heloc without refinancing, navyfederal heloc, loan pronto home equity loan, home equity line of credit vs cash out refi, refinance calculator wells fargo, home equity loan vs heloc vs cash out refinance, best heloc rates in nc, heloc or refinance cash out, best heloc offers, heloc explained for dummies, loancare heloc, home equity line of credit chase bank, navy federal home equity loan reviews, cash out refinance vs home equity line of credit, rocketmortgage heloc, lowest rate heloc, just play cash out amount, benefits of heloc vs refinance, loandepot equity line of credit, does usaa offer heloc loans, heloc rates 2023, which is better heloc or cash out refinance, can you get equity out of your home without refinancing, penfed hel, navy federal heloc loan, refi or heloc, cash out refinance rocket mortgage, kinecta heloc, straight line cash, usaa heloc credit score requirements, home equity line of credit vs refinancing, replace your mortgage with a heloc, heloc loan vs refinance, refinance mortgage vs heloc, heloc as first mortgage, sofi heloc reviews, can a heloc be called due, cash line, explain heloc, reverse mortgage vs cash out refinance, mortgage refinance vs heloc, refinance mortgage with heloc, stated income heloc 2022, heloc vs cash-out refi, cash out refinance chase, is heloc a refinance, refinance mortgage and heloc, heloc vs refinance cash out, mortgage vs line of credit, is a heloc considered a refinance, does usaa do heloc, heloc what does this mean, navy federal home equity loan credit score, penn fed heloc, heloc or refi, heloc or cash out refi, home equity line of credit or cash out refinance, refinance with heloc, frost heloc, how soon can you get a heloc after refinancing, heloc vs refinance calculator, refinance line of credit, can you get a heloc after refinancing, is heloc better than refinancing, rocket mortgage cash out refinance rates, best heloc rates nyc, minimum credit score for divvy, how to get out of a heloc, penfed heloc credit score requirements, navy federal credit union heloc reviews, is it better to get a heloc or refinance, can you get a heloc from a different bank, old national bank home equity loans, cash out or heloc, will heloc rates go down in 2023, navy federal home equity line of credit reviews, navy federal fixed rate equity loan, refinance vs home equity line of credit, loan pronto credit score, refinancing heloc, penfed home equity loan calculator, can you get a heloc after a cash-out refinance, rocket mortgage heloc interest rates, cheloc vs heloc, what happens to heloc when you refinance, home equity line of credit capital one, can you get a heloc without refinancing, heloc vs home equity loan vs cash out refinance, heloc after refinance, is heloc better than cash out refinance, refinance or heloc which is better, cash out heloc, is a heloc better than refinancing, rocket mortgage refinance rates cash-out, we must choose between what’s right and what is easy, does a heloc require a refinance, line of credit vs cash out refinance, is a heloc considered a mortgage, which is better heloc or refinance, navy federal home equity loan requirements, penfed helic, penfed mortgage credit score, should i get a heloc or refinance, is heloc better than refinance, penfed home equity line of credit rates, how to pronounce heloc, home equity line of credit vs refinancing mortgage, does having a heloc affect refinance, can you withdraw cash from heloc, old national bank home equity line of credit, navy federal heloc application, capital one equity loan rates, what is the difference between a heloc and refinancing, closing heloc affect credit score, why are banks stopping helocs, heloc then refinance, current home equity loan rates chase, cash out refinance vs heloc vs home equity loan, capital one home equity rates, is heloc easier to get than mortgage, wells fargo bank home equity loan rates, navy federal equity line of credit, can you get a heloc from a different lender, can you take out a second heloc, does a heloc require refinancing, sofi mortgage credit score requirements, refinance heloc bank of america, refinance or equity line of credit, heloc america first, how long after refinancing can i get a heloc, is it better to cash out refinance or heloc, rocket mortgage refinance cash out, veridian heloc, can you increase your heloc, heloc different lender than mortgage, when do you start paying back a heloc, refinance versus home equity line of credit, heloc cash out refinance, should you get a heloc, cash out refinance vs heloc calculator, chase home equity line of credit application, chase equity line of credit rates, navy federal equity loan rates, does capital one offer home equity lines of credit, chase home equity line of credit calculator, does navy federal offer heloc, heloc vs cash out refi reddit, heloc and refinance, how to get out of a heloc loan, should i refinance or get a heloc, what happens when a home equity line of credit matures, can i get a heloc to pay off my mortgage, is a cash out refi or heloc better, can you get a heloc with a different bank, do i have to refinance to get a heloc, refinance mortgage vs line of credit, what is better heloc or cash out refinance, is a cash out refinance better than a heloc, rushmore heloc, chase bank heloc requirements, how soon can you get a heloc after closing, best heloc lenders in ga, penfed home equity loans, home equity loans navy federal, what is better heloc or refinance, heloc vs extra payments mortgage, can you access equity without refinancing, what is better refinance or heloc, is a heloc the same as a refinance, capital one equity loan, cash out refinance vs heloc reddit, mortgage and heloc at same time, can you pull cash from a heloc, heloc right after closing, rocket mortgage cash out refi, can you apply for heloc after refinancing, how long to get heloc approved, heloc or cash for home improvements, who has the best heloc interest rates, home equity loan rates nfcu, what is better a heloc or cash out refinance, navy federal credit union heloc requirements, which is better home equity line of credit or refinance, can i get a heloc without refinancing, does capital one offer home equity loans, heloc or refinance for home improvements, home equity line of credit interest rates wells fargo, how to withdraw money from heloc, does usaa offer lines of credit, pros and cons to cash out refinance, navy federal credit union home equity loan rates, capital one heloc customer service, what is the difference between heloc and cash out refinance, refinance mortgage to pay off heloc, what is the difference between heloc and refinance, veridian heloc rates, can i get a heloc after refinancing, is a heloc or refinance better, is it easier to refinance or get a heloc, lakeview cash out refinance, difference between heloc and cash out refi, open heloc just in case, home equity loan vs line of credit wells fargo, navy federal heloc reddit, equity line of credit rates wells fargo, standard heloc terms, cash out refinance or home equity line of credit, difference between cash out refinance and heloc, is a heloc easier to get than a mortgage, usaa line of equity, navy federal home equity loan process, whats better cash out refi or heloc, credit score needed for home equity loan wells fargo, are helocs hard to get, how do i get money out of my heloc, does loandepot do home equity line of credit, does capital one offer heloc, what two factors determine the interest rate on a heloc, equity line of credit navy federal, chase mortgage home equity line of credit, is it easier to get a heloc than a mortgage, does navy federal do home equity loans, can i refinance if i have a heloc, capital one heloc loan, do you have to refinance for a heloc, heloc cash, how much can you take out on a heloc, does usaa have heloc, chase equity line of credit calculator, rocket mortgage cash-out refinance, cash out refi vs home equity line of credit, line of credit or refinance, loandepot home equity, heloc refinance meaning, can you get a heloc with another bank, better to refinance or heloc, rocket mortgage refinance rates cash out, chase bank home equity line of credit interest rate, refinance cash out vs heloc, navy fcu home equity loan, chase home equity loan interest rates, does rocket mortgage do cash out refinance, do you need to refinance to get a heloc, better refi, heloc stated income, home equity line of credit vs refinance with cash out, navy federal credit union home equity loan reviews, capital one bank heloc rates, stated heloc, operating loan vs line of credit, heloc cash out, can you refinance with a heloc open, refinancing when you have a heloc, which is better heloc or mortgage, is a cash out refi the same as a heloc, unison vs heloc, does navy federal do helocs, difference between home equity line of credit and refinance, is a heloc the same as a cash out refinance, can you get cash from a heloc, fixed rate home equity loan navy federal, can i get cash from a heloc, chase bank home equity loan interest rate, old national bank home equity loan rates, can you withdraw cash from a heloc, navy federal heloc interest rates, home equity line of credit without refinancing, chase equity line of credit phone number, refinance mortgage or heloc, should i do a heloc or refinance, chase home equity line of credit requirements, refi cash out vs heloc, heloc from different lender than mortgage, cash out loan vs heloc, penfed home equity loan review, cash out refi chase, do you refinance with a heloc, heloc with different lender, can you get a heloc after a cash out refinance, what is better a heloc or refinance, heloc loan vs cash out refinance, heloc refinancing, difference between refinance and heloc, what two factors determine interest rate on a heloc, kinecta refinance, capital one home equity loan calculator, refinance vs equity line of credit, difference between a heloc and a cash out refinance, does usaa do home equity line of credit, penfed home equity line, heloc capital one, pay off heloc with refinance, rocket mortgage refinance credit score, heloc income verification, do you have to use a heloc right away, does usaa offer a heloc, how to pay off your heloc faster, lakeview heloc, chase home equity line of credit phone number, chase bank home equity line of credit rates, capital one refinance credit score, home equity loan interest rates chase, does taking out a heloc affect your credit score, achieva heloc, navy federal home equity loan interest rates, can you borrow equity from your home without refinancing, rocket mortgage cash out, chase bank cash out refinance, loan pronto home equity line of credit, the money source heloc, heloc or cash out refi for investment property, home equity line of credit or refinance, cash out refinance or heloc for investment property, what happens when heloc matures, possible cash, pay off heloc during draw period, cash out mortgage vs heloc, heloc vs refinance mortgage, benefits of heloc vs mortgage, is a heloc or cash out refi better, is cash out refinance more expensive, rocket mortgage va cash out refinance, the best heloc lenders, can you have a heloc without a mortgage, what is better a cash out refinance or a heloc, cash refinance vs heloc, can i pull equity out of my house without refinancing, should i get a heloc or cash out refinance, whats better refinance or heloc, does sofi do heloc, chase cash out refi, chase bank interest rates on home equity loans, is a heloc a cash out refinance, heloc cash advance, does capital one do home equity loans, cash out refi vs heloc for investment property, heloc or cash out refinance reddit, refinance heloc to mortgage, what is better cash out refi or heloc, the best heloc, best heloc rates in ga, should i refinance heloc, can you take cash out of a heloc, home refinance vs heloc, navy federal credit union cash out refinance, capital one home line of credit, which is better cash out refinance or heloc, navy federal heloc ltv, pros and cons cash out refinance, cash out refinance vs line of credit, can i get a heloc if i just refinanced, usaa heloc loans, chase bank home line of credit, equity line of credit vs cash out refinance, home equity loan rates penfed, chase bank heloc application, navy federal home line of credit, can i get a heloc from a different bank, home equity loan vs line of credit vs refinance, rocket mortgage helpc, chase bank home equity loan calculator, is it better to refinance or heloc, navy federal heloc credit score, cash out refinance to pay off heloc, heloc 贷款, what are the advantages and disadvantages of a heloc, heloc refi, is a heloc better than a refinance, chase equity line rates, kinecta home equity loan, which is better mortgage or heloc, is heloc considered a refinance, navy federal home equity rates, equity line of credit rates chase, how to get rid of heloc, when will heloc rates drop, replace your mortgage heloc, refinance and heloc at the same time, rocket mortgage refinance minimum credit score, downside to heloc, does heloc require refinance

Uncategorized