HELOC vs Cash-Out Refinance: Which Is Better Right Now?

Quick Answer

A cash-out refinance replaces your existing mortgage with a new larger mortgage. A HELOC usually keeps your first mortgage in place and adds a separate line of credit secured by your home equity.

For many homeowners with a low existing mortgage rate, the HELOC may be the cleaner option because it avoids disturbing that first mortgage.

Why Today’s Homeowners Are Comparing These Options

Many homeowners locked in very low mortgage rates in prior years. If that first mortgage rate is significantly lower than current market rates, replacing the entire mortgage through a cash-out refinance may not be attractive.

A HELOC allows you to access available equity separately. That can be useful when you need money for a specific purpose but do not want to refinance your whole mortgage.

Common Uses for a HELOC

• Kitchen, bathroom, roof, pool, or major home improvements
• Paying off high-interest credit cards or personal loans
• Emergency reserves or unexpected expenses
• Tuition or major family expenses
• Preparing a property for sale

MyExpressHELOC™ Program Highlights

When a HELOC May Be Better

A HELOC may be a strong fit if:

• You want to keep your current first mortgage rate
• You only need access to a portion of your available equity
• You want a faster digital process
• You want flexibility to draw funds as needed
• You prefer to check eligibility with a soft pull first

When a Cash-Out Refinance May Be Better

A cash-out refinance may still make sense if:

• Your current mortgage rate is already high
• You want one single mortgage payment
• You are improving your total loan terms
• You need a larger amount than a HELOC can provide

Check Your Options Before You Decide

You do not have to guess. Start with a soft-pull eligibility check and see whether a HELOC may fit your situation.

Loan amount eligibility varies by property, credit profile, occupancy, and location.

FAQ

Is a HELOC the same as refinancing?

No. A HELOC is typically a separate line of credit secured by home equity. Your first mortgage can remain in place.

Will checking eligibility hurt my credit?

No. The initial review uses a soft pull through Experian FICO 9 and does not impact your credit score.

Do I need a full appraisal?

Not for loan amounts of $400,000 or less. An AVM or BPO may be used. If the value is not acceptable, a full appraisal can be ordered.

What is the maximum HELOC amount?

Loan amounts may be available up to $750,000, subject to program guidelines and eligibility.