Three ways to access equity
A HELOC is typically a revolving second lien with a variable rate and a draw period. A home-equity loan is generally a fixed-amount second lien with scheduled payments. A cash-out refinance replaces the existing first mortgage with a larger new first mortgage.
What to compare
Do not compare only the advertised rate. Review how much existing debt is being repriced, whether the payment may change, the draw and repayment rules, upfront costs and the expected time to repay.
- Existing first-mortgage rate and balance
- Fixed versus variable payment structure
- Closing costs and annual or transaction fees
- Available line or lump-sum proceeds
- Combined loan-to-value and credit requirements
- Expected payoff timeline
When preserving the first mortgage matters
Homeowners with an attractive existing first-mortgage rate may prefer to evaluate a second-lien option rather than refinance the entire balance. A cash-out refinance may still be worth comparing when consolidation, payment structure or a different first-mortgage strategy supports the broader goal.
Common questions
Frequently asked questions
Is a HELOC rate usually fixed?
Many HELOCs use a variable rate, although some programs offer fixed-rate conversion features for eligible balances. Terms vary by lender.
Does a cash-out refinance replace my current mortgage?
Yes. A cash-out refinance pays off the existing first mortgage and replaces it with a new, larger first mortgage, with eligible proceeds delivered after costs and required payoffs.
Which option has lower closing costs?
Second-lien products may have different upfront costs than a full refinance, but costs and pricing vary. Compare the complete loan estimate, ongoing fees and total interest—not only the initial cash due.