Cash-Out vs. HELOC Refinancing

Dear Ali, 

If you’re interested in borrowing against your home’s available equity, you have choices. Some options are to refinance and get cash out, or to take out a home equity line of credit (HELOC). Here are some of the key differences between a cash-out refinance and a home equity line of credit:

A cash-out refinance  replaces your existing mortgage with a new home loan for more than you owe on your house. You must have sufficient equity built up in your house to use a cash-out refinance. The difference goes to you in cash, which can be spent on home improvements, debt consolidation, or other financial needs.

With a  Home Equity Line of Credit (HELOC ), you are borrowing against the  money already invested in your home. Much like a credit card, you have a  certain amount of money available to borrow and then pay back. You will only pay interest on the amount you borrow.

HELOCs often begin with a lower interest rate than cash-out refinancing loans, but the rate is adjustable.

If you need help determining the best financing choice for you, I am here to assist you. 

Best regards, 

Anna Smith