Equity
Cash-Out vs. HELOC vs. Home Equity Loan
Three ways to turn equity into cash — and how to pick without overpaying.
All three convert home equity into money you can use, but they behave very differently. The right one depends on how much you need, when you need it, and the rate on the mortgage you already have.
| Feature | Cash-out refi | HELOC | Home equity loan |
|---|---|---|---|
| Keeps your first mortgage? | No — replaces it | Yes | Yes |
| What gets repriced | Entire balance | Only the new money | Only the new money |
| How you receive funds | Lump sum | Revolving line, draw as needed | Lump sum |
| Rate type | Usually fixed | Usually variable | Usually fixed |
| Best when | Your rate is already at market | You need flexible or phased access | You need a set amount, predictably |
How to choose
- Have a low first-mortgage rate and need a portion of your equity? Start with a HELOC or home equity loan — keep the low rate, price only the new money.
- Not sure exactly how much you need, or paying in phases (a renovation)? A HELOC’s revolving line fits.
- Need a specific amount with a predictable payment? A fixed home equity loan is the clean choice.
- Already at or above today’s rates and want one simple payment? A cash-out refinance can make sense.
Pro tip
Some HELOCs let you lock a portion of the balance to a fixed rate — the flexibility of a line with the certainty of a loan, while your first mortgage stays exactly where it is.
Common questions
Which is cheaper, a HELOC or a home equity loan?
Neither is automatically cheaper. A HELOC usually starts variable, so its rate can move; a home equity loan is usually fixed. The better value depends on how long you borrow and whether you want payment certainty. We will compare both for your situation.
Can I have a HELOC and a first mortgage at the same time?
Yes — that is exactly how a HELOC works. It sits in second position behind your existing first mortgage, which stays untouched.