A cash-out refinance replaces your existing mortgage with a larger one and hands you the difference. A HELOC leaves your mortgage untouched and adds a second lien behind it.
The deciding factor is usually the rate on the mortgage you already have.
If your current mortgage is well below today's market rate, refinancing repays cheap debt with expensive debt across the whole balance. A HELOC keeps the low rate intact and prices only the new money.
If your existing rate is at or above market, a cash-out refinance can deliver cash and a better rate at the same time.
Large sum, current rate at or above market, wants certainty → cash-out refinance. Smaller or staged sum, current rate below market → HELOC.
Run your own figures through the calculator. No credit check, nothing saved unless you ask.
Calculate my equityA cash-out refinance usually allows up to 80% LTV; HELOCs often go to 85% CLTV, so the answer depends on the lender.
Generally only when the proceeds substantially improve the home securing the loan. Confirm with a tax professional.
Part of The Homeowner's Guide to Home Equity.
A side-by-side comparison of HELOCs and home equity loans: rates, draw periods, payments, and best uses.
Most lenders cap you at 80–85% CLTV. Here is the math on what that leaves you.
Typical HELOC credit score minimums, what rates each tier gets, and how to improve your odds.