Cash Out Refinance or HELOC, Which is Right for You?


“Should I do a cash out refinance or a Home Equity Line of Credit (HELOC)?”  This is one of the most common questions homeowners ask when they want to tap into their home’s equity. There are a number of reasons for each option like home improvements or life events. We want you to be able to clearly and confidently make that decision based on good information. We’re here in Carlsbad, California providing that information for you in the post below.


HELOC’s provide flexibility to borrow as needed and often allow for tantalizing interest-only payments, but they come with a significant risk: rate variability.  Also, as many homeowners during the housing market crash will tell you, banks can “freeze” access to the line without asking.

How do they work?

Home equity financing can be set up as a loan or a line of credit. With a home equity loan, the lender advances you the total loan amount upfront, while a home equity credit line provides a source of funds that you can draw on as needed. – FTC

Cash Out Refinance

Cash out refinances, on the other hand, can offer the stability of a fixed interest rate and payment.

Invetopedia says:

A cash-out refinance is a mortgage refinancing option in which an old mortgage is replaced for a new one with a larger amount than owed on the previously existing loan, helping borrowers use their home mortgage to get some cash.

So which option is right for you?  This is where a good mortgage broker is worth their weight in gold.  You want someone who can evaluate your plans and your financial situation, then overlay them with the outlook for interest rates, Federal Reserve policy, inflation, economic growth, and more. Contact us now to get started.

If you’re not in our state footprint here is a good question to ask yourself: can I comfortably pay off the HELOC balance in the next 12 months?  If so, a HELOC may be worth investigating.

Otherwise, stick with the cash out whenever possible.  The last thing you want is to create unnecessary financial risk and exposure for you and your family.

We a team of experienced experts, we have access to over 60+ banks and lenders. That means you’ve got options! We’re real people, just like you, working in a real office to close your deal. We provide no nonsense, people-based, transparent mortgage loan services with YOU in mind.