HELOC vs Cash-out Refinance

Compare keeping your first mortgage and adding a HELOC with replacing it through a cash-out refinance. A lower payment does not always mean a lower cost.

Estimated cost difference over 10 years

$90,647.02

Under your assumptions, the HELOC has $90,647.02 lower modeled cost over 10 years. This estimated difference is not a guarantee of savings.

Both options deliver $75,000.00 at closing before separately paid fees. Lower first-month payment and lower modeled cost are different measures.

View payment, fees and remaining debt

Your entries

Edit the example values. They are not available rates or offers. Amounts support cents and up to $1 billion. Your entries are not saved.

Your situation

Home value ($)

Context only; no lender equity limits are checked.

Current loan balance ($)

More than $0; dollars and cents.

Current first-mortgage rate (%)

Annual nominal rate; 0–100%, up to 4 decimal places.

Years remaining on mortgage (years)

Whole years, 1–40. Fully amortizing mortgage.

Cash you need ($)

Same cash received in both options, before separately paid fees. Must be above $0.

Comparison horizon (years)

Same period for both options; whole years, 1–40.

Financial as-of date

Date of the assumptions you are comparing.

HELOC assumptions

HELOC rate (%)

0–100%, up to 4 decimal places. Held constant, not forecast.

Interest-only draw period (years)

Whole years, 0–39. Enter 0 for immediate repayment.

Repayment period (years)

Whole years, 1–40; draw plus repayment cannot exceed 40 years.

HELOC fees paid up front ($)

Editable $0 example. Enter setup/closing fees paid separately, not borrowed.

Cash-out refinance assumptions

New rate (%)

0–100%, up to 4 decimal places. Fixed-rate assumption, not a quote.

New term (years)

Whole years, 1–40.

Closing costs added to loan (%)

0–100%, up to 4 decimal places; applied to current balance plus cash needed, before fees.

Payment and cost, side by side

Keep mortgage + HELOC

Preserves your existing first mortgage.

First-month total payment: $2,046.86
Cash received at closing: $75,000.00
Fees paid up front: $0.00
Fees added to the new loan: $0.00
Interest paid over 10 years: $152,526.50
Payments made over 10 years: $245,623.20
Debt remaining after 10 years: $261,903.30
Modeled cost over 10 years: $152,526.50

$531.25 higher than the current mortgage payment.

Cash-out refinance

Replaces your existing first mortgage.

First-month total payment: $2,390.40
Cash received at closing: $75,000.00
Fees paid up front: $0.00
Fees added to the new loan: $8,875.00
Interest paid over 10 years: $234,298.52
Payments made over 10 years: $286,848.00
Debt remaining after 10 years: $311,325.52
Modeled cost over 10 years: $243,173.52

$874.79 higher than the current mortgage payment.

Why the results differ

A payment includes money that pays down debt, not just interest. Over the same 10 years, the HELOC path leaves $261,903.30 owed and the refinance leaves $311,325.52 owed. Modeled cost is payments and fees plus debt still owed, minus starting debt and cash received. This equals interest plus financing fees. Principal is not counted twice.

HELOC fees of $0.00 are paid up front. Refinance fees of $8,875.00 are borrowed and also accrue interest. Both paths deliver $75,000.00 before any separately paid fees.

Your assumptions

As of 2026-10-26; comparison period: 10 years. Defaults are illustrative examples, not quotes.
Current mortgage: $280,000.00 at 3.75%, with 23 years left. Estimated principal-and-interest payment: $1,515.61.
HELOC: 8.5% held constant; 10 interest-only draw years, then 20 repayment years. HELOC-only repayment payment: $650.87. One full draw occurs at closing; no later draws are modeled.
Cash-out: 6.875% fixed for 30 years. New loan: $363,875.00. Closing fees are 2.5% of the existing balance plus requested cash, before fees, and are financed.
Home value: $650,000.00, shown for context only. This tool does not check equity limits, lender eligibility or approval.

HELOC rates are generally variable. This estimate holds your entered rate constant; it does not predict future rates or payments.

Estimates exclude taxes, insurance, escrow, tax effects, prepayment penalties and future refinancing. No rate availability, guaranteed savings, qualification or personalized financial advice is implied.

Results are estimates based on user inputs and do not represent loan terms, APR, or a financing offer. Pre-filled values are illustrative examples, not available or quoted rates. Actual terms depend on credit, property, program, and underwriting. Every result applies to the entered planning scenario, not an observation period or local market statistic. Replace price, tax, insurance and fee allowances with dated, property-specific figures. Missing inputs are not assumed to be zero.

Want help deciding which path fits?

Compare three equity loan structures and stress-test payments with a free fillable PDF guide. No email required.

Download free guide (PDF)

Want a plain-English walkthrough? Cash-out refinance vs HELOC decision guide.

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Frequently asked questions

When does a HELOC beat a cash-out refinance?

Keeping a low first-mortgage rate can reduce modeled cost, but the result also depends on fees, the HELOC rate and repayment terms, and debt remaining at your selected horizon. This tool models one full draw at closing and holds the entered HELOC rate constant; it does not model future draws or predict rates.

When does a cash-out refinance beat a HELOC?

Replacing a higher-rate mortgage can reduce modeled cost under some assumptions. Compare fees and remaining debt as well as the first-month payment; a smaller payment is not necessarily a lower cost. This calculator compares the same requested cash and time period, not lender offers or approval.

Related glossary terms

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