Four ways to turn home equity into cash, compared on combined payment, total interest, and what each one does to the mortgage rate you already have.
Private by design. Your numbers stay on this device.
Educational estimates only. Not financial, tax, or lending advice.
It depends almost entirely on your existing mortgage rate. A cash-out refinance replaces your entire mortgage, so the new rate applies to your whole balance — not just the cash you take. A HELOC or home equity loan is a second lien that leaves your first mortgage completely untouched, so the higher rate applies only to what you borrow.
The practical rule: when your current rate is well below today’s rates, a second lien is frequently cheaper despite its higher headline rate. When your current rate is at or above today’s rates, a cash-out refinance can win by improving your pricing and giving you cash at the same time.
Run your own figures below. None of these options is recommended here, and none implies you would qualify.
Built for US mortgages. Every rate, cost and tax figure below is an editable example you enter — never a live quote.
Compared over the 10 years you expect to stay. None of these is recommended, and none implies you would qualify — the figures show cost and structure so you can weigh them yourself.
Replace your entire existing mortgage with one larger loan and take the difference in cash.
Net cost over your stay
$572,316
$135,037 more than borrowing nothing — about 1.80 per $1 of cash accessed
Add a revolving line of credit secured by your home while your first mortgage stays exactly as it is.
Net cost over your stay
$499,655
$62,376 more than borrowing nothing — about 0.83 per $1 of cash accessed
Interest-only payments during the draw period retire none of the balance. Plan for the repayment-period payment increase.
Add a fixed-rate, fixed-payment second loan drawn in full at closing, keeping your first mortgage intact.
Net cost over your stay
$485,137
$47,857 more than borrowing nothing — about 0.64 per $1 of cash accessed
Take no cash and change nothing. Shown as the baseline for every other option.
Net cost over your stay
$437,279
Every lien combined. A flat stretch on the HELOC line is the interest-only draw period, during which none of the balance is retired.
Both a HELOC and a home equity loan are secured by your home, which is why they price below unsecured credit — and why default can mean foreclosure. See the full cash-out refinance vs HELOC comparison for how to think about the trade-off.
Educational estimates only. Not financial, tax, or lending advice. Every rate here is an example you enter, never a live quote or an offer. Verify loan terms, closing costs, property taxes, insurance and mortgage insurance with qualified providers before deciding.
Structure first — the pricing follows from it.
| Cash-out refinance | HELOC | Home equity loan | |
|---|---|---|---|
| Lien position | First (replaces existing) | Second | Second |
| Your existing rate | Replaced | Preserved | Preserved |
| Rate type | Usually fixed | Usually variable | Fixed |
| Access to funds | Lump sum at closing | Draw repeatedly during the draw period | Lump sum at closing |
| Typical upfront cost | Full closing costs (2%–5%) | Low or none | Low to moderate |
| Payment during early years | Fully amortizing | Often interest-only | Fully amortizing |
| Payment step-up risk | None | Yes — when repayment begins | None |
| Rate risk after closing | None if fixed | Yes — rate can move | None |
| Common LTV limit | ~80% | ~80%–90% combined | ~80%–90% combined |
General characteristics. Limits, pricing and availability vary by lender, product, occupancy and location — nothing here indicates what you would be offered.
The rate you see is not the rate you pay on the whole balance.
Suppose you owe $320,000 at 3.5%, your home is worth $560,000, and you need $75,000. Today a cash-out refinance is offered at 6.5% and a HELOC at 8.25%. The HELOC rate is clearly higher. It is also frequently the cheaper option, and the reason is what each rate applies to:
The refinance re-prices $320,000 by three full percentage points to reach $75,000 of cash. That is roughly $9,600 a year of extra interest on money you were not borrowing. The HELOC’s 1.75-point premium applies to a much smaller base. Enter your own numbers above — the “cost per dollar of cash accessed” figure makes the comparison direct.
The logic inverts when your existing rate is above market. Then the refinance improves pricing on the whole balance and delivers cash, and it is hard to beat.
Two features cause most of the trouble: the variable rate and the interest-only draw.
A HELOC has two phases. During the draw period — commonly ten years — you can borrow and repay repeatedly, and many lenders require interest only. During the repayment period, the balance amortizes and the payment steps up.
Interest-only sounds like flexibility, and it is, but it retires none of the balance. After ten years of interest-only payments on $75,000, you still owe $75,000 — and now it has to be repaid over twenty years instead of thirty. That step-up regularly doubles the payment. The chart above marks it: the flat stretch on the HELOC line is the draw period.
The second issue is rate risk. HELOC rates typically float with the prime rate, so neither your payment nor your total interest is knowable in advance. This calculator holds the rate constant because that is the only honest thing a calculator can do — but a constant-rate model is a snapshot, not a forecast. The CFPB’s explanation of HELOCs covers the disclosures to look for.
A fixed home equity loan removes both problems — fixed rate, fixed payment, fixed payoff date — at the cost of the flexibility to draw only what you need, when you need it.
Every option here is secured by your home.
That security is why these rates sit below credit cards and personal loans. It is also the risk: if you default, the lender can foreclose, and a second-lien holder is repaid after the first mortgage. Converting equity into debt puts the house behind the borrowing.
That is why the calculator always shows a fourth option — borrowing nothing — as the baseline. If the spending is optional, waiting and saving avoids interest entirely. If it is not optional, the comparison tells you which structure costs least over the years you plan to stay.