Guide
Cash-out refinance vs HELOC vs home equity loan
If your current mortgage rate is well below today's rates, a HELOC or home equity loan usually costs less because only the new money is borrowed at the higher rate — in our example the blended rate is 4.90% versus 7.11% for a cash-out refinance. If your current rate is at or above today's, a cash-out refinance can lower the rate on everything at once.
Last reviewed November 13, 2026 · Examples use this week's rates
30-yr fixed avg 7.11% as of November 12, 2026
Source: Freddie Mac PMMS
Cash-out refinance
Replaces your mortgage with a bigger one and pays you the difference. One loan, one payment, usually a fixed rate. Closing costs apply to the whole new loan, and your existing rate is gone.
HELOC
A revolving line of credit secured by your home, typically with a variable rate. You draw what you need during a draw period, often paying only interest, then repay during a repayment period. Flexible, but the payment can change as rates move and can rise when the draw period ends.
Home equity loan
A second mortgage paid as a lump sum with a fixed rate and fixed payments over a set term. Predictable, and you keep your first mortgage untouched.
How to compare
Look at the blended rate on your total debt, the combined monthly payment, total interest over the time you'll keep the loans, and closing costs. Our calculator shows all four. Lenders set combined loan-to-value limits across all loans on the home, which caps how much you can borrow either way.
Worked example at this week's rates
- $250,000 at 4% with 25 years left, needing $60,000: a cash-out refinance at 7.11% costs $2,085/month and $440,740 total interest. Keeping the first loan plus a 15-year second loan at an illustrative 8.63% costs $1,915/month and $193,022 total interest.
- The second-loan rate is an example input (PMMS average + 1.5 points), not a published average.
Rates are Freddie Mac PMMS weekly averages — a national purchase-mortgage benchmark, not a local refinance quote. Closing costs are estimated at 2% unless stated, and payments are principal and interest only.
Run your own numbers
Use the Cash-out vs HELOC calculator with your balance, rate and costs.
Estimates only. Default rates are Freddie Mac PMMS weekly averages — a national purchase-mortgage benchmark, not a local refinance quote. Payments are principal and interest only. reficalculator.com is not a lender or broker; see how we calculate.
Frequently asked questions
- Which is cheapest: cash-out, HELOC or home equity loan?
- It depends mainly on your current mortgage rate and how long you'll carry the debt. Compare blended rate and total interest.
- Are HELOC rates variable?
- Usually. Some lenders offer fixed-rate options on part of the balance.
- Which has the lowest closing costs?
- Second loans often cost less up front than a full refinance, but fees vary.
- Can I get cash out with an FHA or VA loan?
- Both programs offer cash-out refinances with their own limits and requirements.
- How much equity can I borrow?
- Lenders cap combined loan-to-value, often in the 80%–90% range depending on program and credit.