A home equity line of credit (HELOC), is a credit-line secured by your home whereas a cash-out refinance is an entirely new first mortgage with cash back. Most HELOCs have an adjustable interest rate, whereas the ability to lock in a low fixed rate is an advantage of a cash-out refinance.
2017-07-08 · If you can improve on the terms of your first mortgage, that doesn’t mean a cash-out refinance is automatically your best deal. Depending on the amount of cash you want, it might be less expensive to refinance your first mortgage with a cheaper rate-and-term loan and then add a second mortgage.
Cash-out refinance gives you a lump sum when you close your refinance loan. The loan proceeds are first used to pay off your existing mortgage(s), including closing costs and any prepaid items (for example real estate taxes or homeowners insurance); any remaining funds are yours to use as you wish.