HELOC vs. cash-out refinance
Can I borrow against my home and keep my current mortgage rate?
Yes. A HELOC or a fixed-rate home equity loan can let you borrow against your equity while keeping your existing first mortgage. A cash-out refinance replaces that mortgage with a new, larger one. Compare what each option would cost across both balances.
Three ways to tap your home equity
| Option | What happens to your first mortgage? | How you borrow and repay |
|---|---|---|
| HELOC | You keep your existing mortgage and add a second lien. | Draw from a credit line as allowed by your agreement. A variable rate can change your payment. |
| Fixed home equity loan | You keep your existing mortgage and add a second lien. | Receive a lump sum. A fixed rate gives you a predictable principal-and-interest payment. |
| Cash-out refinance | A new first mortgage pays off and replaces your current loan. | Receive the remaining proceeds in cash after the payoff and any costs deducted at closing. The new rate and term apply to the full new balance. |
Estimate your borrowing room with the Home Equity Calculator →
What does borrowing $50,000 cost?
Both examples start with a $250,000 first mortgage with 25 years left. Each option delivers the same $50,000 before fees, which are paid separately at closing. The HELOC assumes a full draw and five years of interest-only payments at 8.5%, held flat for comparison. The home equity loan assumes an 8% fixed interest rate (8.51% illustrative APR) over 15 years. The cash-out refinance assumes $300,000 at a 6.25% fixed interest rate (6.44% illustrative APR) over 30 years.
Hypothetical comparison only. Rates and fees illustrate the math and are not a current loan offer. APR examples treat all stated upfront fees as finance charges. The HELOC’s illustrative APR is 8.5% and may increase. Monthly figures exclude taxes and insurance. Five-year cost includes interest on all balances plus upfront fees and excludes principal repaid. Ending balances show what you would still owe after five years. Figures are rounded.
| Option | Combined monthly payment | Upfront fees | 5-year interest + fees | Balance after 5 years |
|---|---|---|---|---|
| Keep first + HELOC | $1,540 | $1,000 | $57,145 | $263,764 |
| Keep first + fixed home equity loan | $1,663 | $1,500 | $54,448 | $253,147 |
| Cash-out refinance | $1,847 | $6,000 | $96,841 | $280,012 |
Keeping the 3% mortgage saves about $42,400 in five-year interest and fees with the fixed home equity loan compared with the cash-out refinance. The HELOC has the lowest initial monthly payment because its payment covers interest only during the example.
| Option | Combined monthly payment | Upfront fees | 5-year interest + fees | Balance after 5 years |
|---|---|---|---|---|
| Keep first + HELOC | $2,202 | $1,000 | $112,430 | $279,331 |
| Keep first + fixed home equity loan | $2,325 | $1,500 | $109,733 | $268,715 |
| Cash-out refinance | $1,847 | $6,000 | $96,841 | $280,012 |
With the higher existing rate, the refinance has the lowest five-year interest and fees in this example. It also restarts the term at 30 years and leaves a higher balance after five years than either second-lien option.
Compare the numbers for your home
Your home secures these loans. Missing payments can put your home at risk. Program availability and terms depend on your property, credit, equity, and underwriting.
In Michigan, Florida, or California, a PMF loan officer can walk through your current rate, remaining term, and how much you need. Ask to see the total monthly payment, closing costs, and what you’d still owe after the time you expect to keep the loan.