HELOC vs Cash-Out Refinance Calculator

Q: How much does a cash-out refinance cost vs a HELOC?

A HELOC typically costs $0–$1,500 in closing costs — many lenders waive fees entirely. A cash-out refinance typically costs 2–5% of the new loan amount. On a $400,000 new loan, that is $8,000–$20,000 upfront. The cash-out refi's higher closing costs mean you need to stay in the home long enough for the lower monthly rate to recoup that upfront expense — typically 5–10 years depending on the rate difference.

Q: Does a cash-out refinance affect my first mortgage rate?

Yes — a cash-out refinance replaces your existing first mortgage entirely with a new loan at today's rate. If you have a low existing rate (e.g. 3–4% from 2020–2021), a cash-out refi at current rates (7%+) would significantly increase your mortgage cost on the full balance. A HELOC avoids this by leaving your first mortgage completely untouched — it sits as a second lien on top of your existing loan.

Q: What is the maximum you can borrow with each option?

For a HELOC, most lenders allow a combined LTV (mortgage + HELOC) of up to 85–90% of your home value. For a cash-out refinance, conventional loan limits cap the new loan at 80% LTV. On a $500,000 home with a $300,000 mortgage: HELOC max = ($500K × 0.85) − $300K = $125,000. Cash-out refi max = ($500K × 0.80) − $300K = $100,000. The HELOC allows higher leverage.

Q: How long does each take to close?

A HELOC typically takes 2–6 weeks from application to funding. Some lenders using automated valuation models (AVMs) can approve in 5–7 business days. A cash-out refinance typically takes 30–60 days — it requires a full appraisal, income verification, and complete mortgage underwriting. If you need funds quickly, a HELOC is generally faster.

Compare a HELOC and a cash-out refinance side-by-side. See total cost, monthly payment difference, break-even point, and which option saves you more money based on how long you plan to stay in your home.

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Total cost comparison

5-yr & 10-yr scenarios

Break-even point

When refi becomes cheaper

Monthly payment diff

Draw period vs new mortgage

Example comparison

Live results

Your scenario

Amount needed $100,000

HELOC rate 8.25% APR

Cash-out refi rate 7.00% APR

Planning to stay 10 years

HELOC

$688/mo

Draw period payment

Closing costs ~$500

5-yr total cost $41,780

10-yr total cost $83,060

Cash-out refi

+$665/mo

Extra mortgage cost

Closing costs ~$4,000

5-yr total cost $43,900

10-yr total cost $79,800

Compare my scenario Today's rates

HELOC vs Cash-Out Refinance — Side-by-Side Cost Comparison

Results update instantly

Shared details

Home value $500,000

$0$2M

Current mortgage balance $300,000

$0$2M

Amount needed $100,000

$10K$500K

Planning to stay 10 years

HELOC details

HELOC interest rate 8.25%

1%20%

Draw period 10 yrs

Repayment period 20 yrs

HELOC closing costs $500

$0$5K

Cash-out refi details

New mortgage rate 7.00%

1%15%

New loan term 30 yrs

Closing costs 2.5%

% of new loan

0.5%6%

Current mortgage rate 6.50%

1%15%

Your results

HELOC

2nd lien

Draw payment$688/mo

Repayment pmt

$857/mo

Closing costs$500

Draw + repayment interest$164,220

5-year cost$41,780

10-year cost$83,060

Cash-out refi

Replaces 1st

New total pmt$2,661/mo

Current est. payment$1,896/mo

Extra vs current+$665/mo

Closing costs$10,000

Interest on cash-out only$139,800

5-year cost$49,900

10-year cost$79,800

Cash-out refi is cheaper for 10-year stay

Based on total cumulative cost including closing costs and payments

Closing cost difference: HELOC costs ~$500 vs refi ~$10,000 — a $9,500 upfront advantage for HELOC that takes years to recover through lower payments.

Cumulative cost by year

HELOC cumulative cost

Cash-out refi cumulative cost

Break-even at year 7. HELOC is cheaper before due to lower closing costs. After year 7 the refi is cheaper.

HELOC total cost

$83,060

Over 10-year stay

Cash-out refi total

$79,800

Over 10-year stay

Savings with winner

$3,260

Over your planned stay

Break-even point

Year 7

HELOC cheaper before, refi after

Cash-out refi recommended

For a 10-year stay, the cash-out refi saves approximately $3,260 in total cost

Understand the mechanics

How each option works

HELOC and cash-out refinance both let you access home equity — but they work very differently in terms of loan structure, rate type, and how they affect your existing mortgage.

HELOC

Second lien · Variable

Loan structure

1st lien — existing mortgage (unchanged) stays as-is

+ added on top

2nd lien — HELOC (new, separate) revolving

A HELOC is a revolving line of credit secured by your home as a second mortgage. You draw funds as needed (up to your limit), pay interest-only during the draw period, then repay principal + interest over the repayment period. Your existing mortgage stays untouched — rate, term, and balance unchanged.

Advantages

Low closing costs ($0–$1,500)

Preserves existing mortgage rate

Revolving — draw, repay, draw again

Pay interest only on what you draw

Disadvantages

Variable rate — payment can rise

Draw period ends — line closes

Payment shock at repayment start

Harder to qualify (second lien)

Cash-out refi

Replaces mortgage · Fixed

Loan structure

Old mortgage (paid off & closed) eliminated

↓ replaced by

New 1st lien — (old balance + cash-out) fixed rate

A cash-out refinance replaces your existing mortgage with a new, larger loan. You receive the difference in cash. Your old mortgage is paid off and closed. You now have one loan at the new rate and term — typically a fixed rate for 15–30 years, giving payment certainty for the life of the loan.

Advantages

Fixed rate — payment never changes

Single loan — simplifies finances

No draw period or repayment shock

Potentially lower rate than HELOC

Disadvantages

High closing costs (2–5% of loan)

Resets mortgage clock (30 yr again)

Loses existing favorable rate

Full underwriting required

8-factor breakdown

Full comparison table

Every dimension that matters when choosing between a HELOC and a cash-out refinance — side-by-side with a winner for each factor.

Factor

HELOC

Cash-out refi

Winner

Rate type

Predictability

Variable (prime + margin)

Fixed for full term

Refi

Closing costs

Upfront expense

$0–$1,500 typical

2–5% of new loan

HELOC

Monthly payment

Short-term cost

Interest-only draw pmt

Higher — P+I on full loan

HELOC

Loan structure

Effect on mortgage

2nd lien — 1st unchanged

Replaces 1st mortgage

HELOC

Access to funds

Flexibility

Revolving — draw as needed

Lump sum at closing

HELOC

Long-term cost

Total interest paid

Higher (variable rate risk)

Lower (fixed, often lower rate)

Refi

Risk to existing rate

Mortgage rate impact

None — preserves your rate

Replaces with new rate

HELOC

Best for

Ideal scenario

Short stays, smaller needs

Long stays, large amounts

Depends

The table winner changes with your situation. If you plan to stay long-term and need a large sum, the cash-out refi often wins overall despite higher closing costs. If you need flexibility or a smaller amount for a shorter timeframe, HELOC wins on cost. Use the calculator above to find your specific break-even point.

Make the right decision

When to choose each

Neither option is universally better. The right choice depends on how long you plan to stay, how much you need, whether your current rate is low, and your risk tolerance for payment changes.

Choose HELOC when…

4 scenarios where HELOC wins

You plan to move within 5–7 years

HELOC's lower closing costs mean you break even before selling. With a refi, you pay 2–5% upfront and may never recoup it if you sell early.

You have a low existing mortgage rate

If your current mortgage is at 3–4%, a cash-out refi at 7%+ would raise your rate on the entire balance. HELOC lets you preserve that low rate on your first mortgage.

You need a smaller amount ($30K–$100K)

For smaller needs, refi closing costs (2–5% of the new larger loan) are disproportionately high. HELOC costs almost nothing upfront — often $0–$500.

You want ongoing access to funds

A HELOC is revolving — draw for a renovation, repay, then draw again for the next project. A refi gives you one lump sum with no future access.

Choose cash-out refi when…

4 scenarios where refi wins

You plan to stay 10+ years

The refi's lower fixed rate compounds over time. After the break-even point (typically 5–10 years), the refi is meaningfully cheaper than a variable HELOC — and the gap widens with each passing year.

You want payment certainty

With a fixed-rate refi, your payment is the same in year 1 as year 20. If the prime rate rises 3%, your HELOC payment could jump significantly. Refi eliminates that risk entirely.

You need a large amount ($150K+)

For large sums, the refi's lower rate makes a big difference in total interest. The closing costs become a smaller percentage of the total loan, and the rate savings are more substantial.

Your current mortgage rate is already high

If you are already paying 6.5%+ on your mortgage, refinancing at today's rates (even with cash-out) may not significantly worsen your first lien — and could even improve it.

Quick decision guide — work through these questions in order

Is your current mortgage rate below 5%?

Yes → HELOC (protect your low rate)No → continue

Do you plan to sell or move within 5 years?

Yes → HELOC (avoid high refi closing costs)No → continue

Do you need funds on an ongoing basis (renovation in phases)?

Yes → HELOC (revolving access)No → continue

Do you need more than $150,000?

Yes → Refi likely (rate savings justify costs)No → continue

Are you comfortable with a variable rate payment?

Yes → HELOC may workNo → Refi (fixed rate certainty)

Where the money actually goes

Full costs breakdown

Understanding every cost component — upfront and ongoing — is the only way to make an accurate comparison. Here is what to expect from each option.

HELOC — typical costs

On a $100,000 HELOC at 8.25%

$500

upfront closing

Application fee

Most lenders waive this

$0–$75

Appraisal fee

Many lenders use AVMs (free)

$0–$500

Title search & insurance

Required on some HELOCs

$0–$300

Origination / admin fee

Lender-specific; often waived

$0–$500

Annual fee

Ongoing; charged each year

$0–$75/yr

Early termination fee

If closed within 2–3 years

$300–$500

Interest (draw period)

At 8.25% on $100K

$6,188/yr

Cash-out refi — typical costs

On $400K loan ($300K + $100K cash-out)

$8–$20K

upfront closing

Origination fee

Largest single cost item

0.5–1% ($2K–$4K)

Appraisal fee

Full appraisal always required

$400–$700

Title search & insurance

Required on all refis

$500–$1,500

Government recording fees

State/county varies

$25–$250

Prepaid items (escrow)

Insurance, taxes, prepaids

$2K–$5K

Discount points (opt.)

Buy rate down; optional

0–2% of loan

Interest on cash-out amt

At 7.00% on $100K portion

$5,833/yr

How to calculate your personal break-even point

Refi closing costs

$10,000

The total upfront cost you pay to refinance. This is the gap you need to recover.

Monthly rate saving

~$125/mo

HELOC draw payment minus refi extra cost per month. This is your monthly benefit from the lower rate.

Break-even months

80 months

$10,000 ÷ $125/mo = 80 months. After month 80 (~6.7 years), refi has paid back its closing costs.

Your decision

Stay > 7 yrs?

If yes, refi wins. If no, HELOC wins. Use the calculator above to find your exact number.

6 questions answered

HELOC vs cash-out refi FAQ

Common questions about choosing between a HELOC and a cash-out refinance — answered clearly.

Neither is universally better — it depends on your situation. A HELOC is better if you have a low existing mortgage rate, plan to stay fewer than 5–7 years, need a smaller amount, or want revolving access to funds. A cash-out refi is better if you plan to stay 10+ years, want payment certainty from a fixed rate, need a large lump sum, or your existing mortgage rate is already high. Use the calculator above to find your personal break-even point.

A HELOC typically costs $0–$1,500 in closing costs — many lenders waive fees entirely. A cash-out refinance typically costs 2–5% of the new loan amount. On a $400,000 new loan, that is $8,000–$20,000 upfront. The cash-out refi's higher closing costs mean you need to stay in the home long enough for the lower monthly rate to recoup that upfront expense — typically 5–10 years depending on the rate difference.

Yes — a cash-out refinance replaces your existing first mortgage entirely with a new loan at today's rate. If you have a low existing rate (e.g. 3–4% from 2020–2021), a cash-out refi at current rates (7%+) would significantly increase your mortgage cost on the full balance. A HELOC avoids this by leaving your first mortgage completely untouched — it sits as a second lien on top of your existing loan.

For a HELOC, most lenders allow a combined LTV (mortgage + HELOC) of up to 85–90% of your home value. For a cash-out refinance, conventional loan limits cap the new loan at 80% LTV. On a $500,000 home with a $300,000 mortgage: HELOC max = ($500K × 0.85) − $300K = $125,000. Cash-out refi max = ($500K × 0.80) − $300K = $100,000. The HELOC allows higher leverage.

Not typically on the same property at the same time, but sequentially yes. Some homeowners do a cash-out refi to consolidate debt and then later open a HELOC on the remaining equity. However, having both simultaneously would mean the HELOC is subordinated to the new first mortgage, which some lenders may not allow. Each lender has different policies — always check before applying.

A HELOC typically takes 2–6 weeks from application to funding. Some lenders using automated valuation models (AVMs) can approve in 5–7 business days. A cash-out refinance typically takes 30–60 days — it requires a full appraisal, income verification, and complete mortgage underwriting. If you need funds quickly, a HELOC is generally faster.

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