Comparison

Home Equity Loan vs Cash-Out Refinance:
Second Mortgage or Full Refinance?

A home equity loan adds a second mortgage while keeping your first mortgage intact. A cash-out refinance replaces your entire mortgage with a new, larger loan. Choose based on your current rate, how much cash you need, and closing costs. Dream Financial Management since 1994.

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Home Equity Loan vs Cash-Out Refinance

Feature Home Equity Loan Cash-Out Refinance
Lien Position Second mortgage First mortgage (replaces existing)
Existing Mortgage Kept intact Paid off & replaced
Rate Fixed 7-8.5% Fixed 6-7%
Closing Costs $500-2,000 2-5% of loan
Term 5-30 years 15-30 years
Best When Current rate is good, need smaller sum Current rate is high, need large sum

Keep Your Current Mortgage If:

  • Your current rate is below today's rates
  • You've paid down significant principal and don't want to restart
  • You need less than $100K and want lower closing costs

Cash-Out Refinance If:

  • Today's rates are lower than your current mortgage rate
  • You need $100K+ and can absorb closing costs
  • You want one payment instead of two

Find Your Best Home Equity Option

Compare Options — Free