HELOC vs Cash Out Refinance: The $10,000 Mistake Most Homeowners Make
Three-way comparison with real payment math: HELOC (variable, revolving), home equity loan (fixed lump sum), and cash-out refinance (replaces first mortgage). Which makes sense when you have a sub-4% first mortgage.
What you'll learn
- How to calculate your available equity: appraised value × 80% − existing mortgage balance
- HELOC draw period vs repayment period — and the interest-only vs P&I payment difference
- Why homeowners with 2.5–3.5% first mortgages almost always prefer a HELOC over a cash-out refi in 2025–2026
- Combined loan-to-value (CLTV) — the 80–85% limit most lenders apply to second liens