Home equity calculator

HELOC vs. cash-out refinance

See which costs less per month at today’s rates: keeping your mortgage and adding a home equity loan, or refinancing everything into one new loan.

Chantilly, VA · today’s rates

Home equity costs $615 less per month

Keep your mortgage + home equity loan

$2,357/mo

Current mortgage: $1,706/mo at 3.25%
Home equity loan: $651/mo at 8.075%, 20 yrs
Cash to you: $75,053

Cash-out refinance

$2,972/mo

New loan: $425,000, 30 yrs
Rate 7.500% (7.718% APR), 1.816 points
Your whole balance moves to today’s rate

See my home equity options

Estimates for a primary single-family home. Cash-out refinance priced at today’s 30-year fixed conventional rate with about 2 points; home equity priced at a 20-year fixed rate including a 2% origination fee. Payments are principal and interest only. Not a commitment to lend; subject to credit approval and underwriting. Rates change daily.

What’s the difference?

A home equity loan or HELOC is a second loan. Your first mortgage stays exactly as it is, rate and all, and you borrow only the cash you need.

A cash-out refinance replaces your mortgage with a bigger one. You get the difference in cash, but your whole balance moves to today’s rate.

Side by side

	Home equity loan or HELOC	Cash-out refinance
Your current mortgage	Stays the same	Replaced
Rate on what you owe now	Unchanged	Moves to today's rate
How much you can borrow	Up to about 90% of value	Usually up to 80% of value
Closing costs	On the new amount only	On the whole new loan
Payments	Two: mortgage + home equity	One
Best when	Your rate is below today's	Today's rates beat yours

When home equity wins

Your mortgage rate is lower than today’s
You need less than about a third of what you owe
You want to borrow more than 80% of your home’s value
You want lower closing costs

When a cash-out refinance wins

Today’s rates are at or below your current rate
You want a single payment
You need a lot of cash compared with what you owe
You want to reset to a 30-year term to lower the payment

Questions

Is a HELOC better than a cash-out refinance?

If your current mortgage rate is lower than today's rates, usually yes. A HELOC or home equity loan only charges today's rate on the new money, while a cash-out refinance moves your whole balance to today's rate.

When does a cash-out refinance make more sense?

When today's rates are at or below your current rate, or when you want one loan and one payment. It can also lower your payment by restarting a 30-year term.

How much can I borrow with each?

Home equity loans and HELOCs go up to about 90% of your home's value across both loans. Cash-out refinances usually top out at 80%.

Which has lower closing costs?

Home equity is usually cheaper to close because costs are based on the new amount only. A cash-out refinance has full closing costs on the whole new loan.

Does either affect my credit?

Using this calculator doesn't. Applying for either one includes a credit check.