HELOC vs Cash-Out Refinance Calculator

How to read the results

10-year total interest cost is the fairest comparison because it captures both the rate and the closing costs on the same time horizon. For the cash-out refi, this figure includes the extra interest you'll pay on the existing balance that gets repriced at the new rate — which is often the hidden cost of a cash-out refi.

Payment change vs. today tells you whether the cash-out refi lowers or raises your monthly cash outflow, factoring in that you're paying off the existing mortgage and starting a new one.

The recommendation is based on a simple heuristic: if the cash-out refi's 10-year total interest cost is more than 20% higher than the HELOC's, we recommend the HELOC. If it's within 20%, we favor whichever fits your situation better (flexibility vs. fixed payment).

When a HELOC almost always wins

• Your existing mortgage rate is 4% or lower and today's rates are 7%+ — repricing your $300K balance at 7% costs way more than paying HELOC interest on the extra $100K
• You need less than $75,000 — closing costs eat too much of a cash-out refi
• You want flexible access, not a lump sum (renovation in phases, occasional bridge financing, standing emergency line)
• You plan to pay it back within 3-5 years — a 30-year cash-out refi never gets amortized much in that window

When a cash-out refi is worth considering

• Your existing mortgage rate is already at or above current market rates
• You need a large lump sum ($150K+) for a defined purpose
• You want the certainty of a fixed rate and fixed payment for the entire loan
• You'd combine cash-out with a rate/term refi anyway (e.g., FHA to conventional to drop MI)

What the calculator does not model

A few real-world factors that can shift the answer and that you should discuss with a licensed lender:

• Tax deductibility of interest (deductible on both products only when funds are used to buy, build, or substantially improve the home securing the loan)
• HELOC variable-rate risk — the calculator assumes a fixed HELOC APR, but most HELOCs are variable and can move with prime
• Fixed-rate HELOC options — some lenders let you lock a portion of the balance
• Prepayment penalties (rare on both today but worth checking)
• PMI implications if a cash-out refi pushes you above 80% LTV