Refinance vs. HELOC
What’s the Right Option for You?
When you're looking to tap into your home equity, two popular options come up: a cash-out refinance and a home equity line of credit (HELOC). While both allow you to access cash based on your home’s value, they work very differently — and choosing the right one depends on your financial goals, credit profile, and current mortgage.
🔁 What Is a Cash-Out Refinance?
A cash-out refinance replaces your existing mortgage with a new, larger loan. You receive the difference in cash and typically start a new 15- or 30-year loan term.
Example:
If your home is worth $500,000 and you owe $300,000, you may refinance into a new $400,000 loan — using $100,000 of that as cash (minus closing costs).
Best for:
- Consolidating high-interest debt
- Renovations
- Lowering interest rate while accessing equity
- Long-term fixed payments
🔄 What Is a HELOC?
A home equity line of credit (HELOC) is a second mortgage that acts like a credit card. You borrow against your equity as needed — only paying interest on what you use.
Key features:
- Variable interest rates
- 10-year draw period
- Revolving credit — borrow, repay, repeat
- You keep your current mortgage
Best for:
- Ongoing or uncertain expenses
- College tuition
- Emergency funds
- Shorter-term needs
🔑 Key Differences at a Glance
📌 Cash-Out Refinance
- Replaces your existing mortgage
- Fixed interest rate
- Provides a lump sum of cash at closing
- Monthly payments like a regular mortgage
- Ideal for debt consolidation, renovations, or large expenses
📌 HELOC (Home Equity Line of Credit)
- Does not replace your mortgage (acts as a second loan)
- Usually has a variable interest rate
- Access funds as needed, like a credit card
- Interest-only payments during draw period
- Better for flexible, ongoing, or emergency expenses
🏡 Which Is Better for You?
It depends on your goals. If you want predictable payments and long-term savings, a cash-out refinance may be the right move — especially in a rate-friendly environment. If you’re unsure how much you’ll need or want more flexibility, a HELOC could make more sense.
At Wain Capital, we walk you through both options and help you compare rates from multiple lenders to find your best-fit solution.
📞 Let’s Talk About Your Home Equity Strategy
Whether you're in Arizona, California, or one of the other states we serve, Wain Capital is ready to help you make the smartest move with your home equity.
👉 Call us at 480‑336‑3737 or request a consultation to get started today.