Lowest total cost over 7 years
HELOCThe HELOC costs the least over 7 years: about $6,058 less than the home equity loan, counting interest and closing costs. The cash-out refinance adds about $74,512 of interest on the $300,000 you already owe.
SwitchWize decision guide
HELOC vs Home Equity Loan vs Cash-Out Refinance Calculator: Which Costs Less?
Add up the interest and closing costs for the years you plan to keep the loan. If your current mortgage rate is low, a cash-out refinance replaces it with the new rate on everything you owe.
What you can expect
- No login required
- No credit pull
- Assumptions shown
- Sources included
Quick answer
If your current mortgage rate is low, a HELOC or home equity loan usually costs less. A cash-out refinance can win when its rate is close to or below your current rate.
A cash-out refinance replaces your whole mortgage, so the new rate applies to everything you owe. Say you owe $300,000 at 3.5% and need $50,000. A refinance at 7% charges 7% on all $350,000. A HELOC or home equity loan keeps your 3.5% and adds a second loan for the $50,000 only.
See current HELOC ratesIf HELOC
Often the cheapest to open. Good when you need money in stages. The rate can go up.
If home equity loan
A set payment that does not change. Good when you need one amount now and want to keep your mortgage rate.
If cash-out refi
Can win when the new rate is close to or below your current rate. Closing costs are usually the highest.
Key number to watch
A cash-out refinance must charge about 3.47% or less to beat the HELOC over 7 years.
Test your situation
See your result in dollars
Change any number below to match your situation. No login is required. Saved decisions stay on this device, and signed-in users can revisit them across devices.
$
The amount you still owe. It is on your latest mortgage statement. Enter 0 if your home is paid off.
%
The interest rate on the mortgage you have now. Look on your mortgage statement or your closing papers.
years
How many years until your current mortgage is paid off. Your statement may show the payoff date.
$
The amount you want to borrow against your home.
years
How long until you expect to sell, pay it off or refinance again. The answer can change with this number.
Your answer so far
The HELOC costs the least over 7 years: about $6,058 less than the home equity loan, counting interest and closing costs. The cash-out refinance adds about $74,512 of interest on the $300,000 you already owe.
See the full breakdownFrom your lender's quote
Copy these from your Loan Estimate or written quote. Nothing leaves your browser.
%
A HELOC rate usually changes over time. Start with the rate the lender quotes you. Raise it if you think rates will go up.
$
A HELOC does not come with a Loan Estimate. Ask the lender for its fees in writing, such as appraisal and setup fees.
%
The rate the lender offers you. It is on your Loan Estimate.
$
The total closing costs on your Loan Estimate.
%
The rate the lender offers on the new, bigger mortgage. It is on your Loan Estimate.
$
The total closing costs on your Loan Estimate. A refinance often costs more to close than the other two.
The HELOC costs the least over 7 years: about $6,058 less than the home equity loan, counting interest and closing costs. The cash-out refinance adds about $74,512 of interest on the $300,000 you already owe.
HELOC
$88,099
interest plus closing costs
Home equity loan
$94,157
interest plus closing costs
Cash-out refi
$173,615
interest plus closing costs
Try a scenario
What could change this
A cash-out refinance must charge about 3.47% or less to beat the HELOC over 7 years.
How certain: high
Within 30 years, the HELOC stays cheaper than every loan with higher closing costs.
How certain: scenario dependent
Check these assumptions
- • The cash-out refinance rate is higher than your current 3.50% rate. You would pay the higher rate on your whole $300,000 balance, not only on the new cash.
- • A HELOC rate usually changes over time. The calculator uses the average rate you enter, so your real payments can go up or down.
- • Many HELOCs let you pay only interest at first. The calculator assumes you pay back the HELOC in equal monthly payments from the start.
- • All three loans use your home as security. If you cannot make the payments, you could lose your home.
- • The new loan runs 30 years, longer than the 25 years left on your mortgage. A lower payment can still mean more interest over time.
What matters most
Lowest monthly payment at the start
Home equity loanThe home equity loan starts at about $1,994 a month for all your home loans together. A lower payment can still cost more in total.
Borrow only what you need, when you need it
HELOCA HELOC lets you borrow what you need, up to a limit, during its borrowing years. A home equity loan and a cash-out refinance pay you the full amount at once.
Side-by-side comparison
What happens to your current mortgage
- HELOC
- Stays as it is
- Home equity loan
- Stays as it is
- Cash-out refi
- Paid off and replaced by a bigger loan
How you get the cash
- HELOC
- Borrow as you need it, up to a limit
- Home equity loan
- All at once
- Cash-out refi
- All at once
Rate
- HELOC
- Usually changes over time
- Home equity loan
- Usually fixed
- Cash-out refi
- Set by the new loan, on your whole balance
Monthly payments
- HELOC
- Two: your mortgage and the HELOC
- Home equity loan
- Two: your mortgage and the home equity loan
- Cash-out refi
- One
Cost papers you get
- HELOC
- Truth in Lending papers, not a Loan Estimate
- Home equity loan
- Loan Estimate
- Cash-out refi
- Loan Estimate
Your home as security
If you cannot pay, you could lose your home with any of the three.
- HELOC
- Yes
- Home equity loan
- Yes
- Cash-out refi
- Yes
What could go wrong
Home equity line of credit (HELOC)
- What needs to work
- Rates stay near your guess, and you pay the balance down on time.
- Common problem
- Rates rise, or the payment jumps when the borrowing years end.
- What it could cost
- Higher payments and more interest than you planned.
- How to prepare
- Fair. You can pay it off early or move the balance to a fixed-rate loan.
Home equity loan
- What needs to work
- You need the full amount now and can afford the set payment.
- Common problem
- You borrow more than you need and pay interest on unused cash.
- What it could cost
- Interest on the full amount from the first day.
- How to prepare
- Fair. You can pay it off early. Check the loan papers for a fee.
Cash-out refinance
- What needs to work
- The new rate is close to or below your current rate, and you keep the loan for years.
- Common problem
- You give up a low rate on your whole balance to get a small amount of cash.
- What it could cost
- Extra interest on the money you already owed, plus the highest closing costs.
- How to prepare
- Hard. Your old rate is gone once the old mortgage is paid off.
A simple backup plan
Protect a low mortgage rate
If your current rate is low, keep that mortgage. Borrow only the new cash with a second loan.
- 1Find your current rate and balance on your mortgage statement.
- 2Get a Loan Estimate for a home equity loan and for a cash-out refinance. Ask the HELOC lender for its fees in writing.
- 3Enter the numbers and the years you plan to keep the loan.
- 4The calculator shows the highest refinance rate at which the refinance costs the least. If your offer is higher, a second loan costs less.
Educational illustration only. The right amount depends on your needs and timing.
What to do next
Question 1
Is the cash-out refinance rate close to or below your current mortgage rate?
Yes: Enter your numbers. The refinance may cost the least.
No: Look at a HELOC or home equity loan first.
Question 2
Do you need all the cash now?
Yes: A home equity loan gives you one amount and a set payment.
No: A HELOC lets you borrow only what you need, when you need it.
Question 3
Would a rising payment strain your budget?
Yes: Choose a fixed-rate home equity loan.
No: A HELOC can work. Plan for the rate to change.
Plain-text decision tree. Is the cash-out refinance rate close to or below your current mortgage rate? If yes, Enter your numbers. The refinance may cost the least. If no, Look at a HELOC or home equity loan first. Do you need all the cash now? If yes, A home equity loan gives you one amount and a set payment. If no, A HELOC lets you borrow only what you need, when you need it. Would a rising payment strain your budget? If yes, Choose a fixed-rate home equity loan. If no, A HELOC can work. Plan for the rate to change.
When to check again
- Mortgage or HELOC rates go up or down by half a point, such as from 7% to 6.5%.
- Your plans to sell or move change.
- You need more cash than you first thought.
- Your HELOC borrowing years are about to end.
Methodology
The calculator adds up interest and closing costs for each option over the years you enter. For a HELOC or home equity loan, it counts interest on your current mortgage plus the new loan. For a cash-out refinance, it counts interest on one new loan for your balance plus the cash.
The starting numbers are examples, not offers. Replace them with your own balance, your rates and the fees from your Loan Estimate or lender.
- • The HELOC uses one average rate for the whole time. Real HELOC rates usually change.
- • Many HELOCs let you pay only interest at first. The calculator assumes equal monthly payments from the start.
- • Closing costs are treated as paid in cash at the start, not added to the loan.
- • Taxes, insurance and tax deductions are not counted.
- • Paying down what you owe is not counted as a cost. That money builds your share of the home’s value.
Sources are reviewed every quarter. Editorial conclusions do not depend on affiliate availability.
Sources
CFPB: What is a home equity line of credit (HELOC)?Checked November 5, 2026 · high confidence
HELOCs usually have a variable rate. You borrow for a set number of years, then pay it back. Payments are often higher once repayment starts. Falling behind can cost you your home.
CFPB: What other types of loans are similar to a HELOC?Checked November 5, 2026 · high confidence
A cash-out refinance replaces the existing mortgage with a bigger one and often has closing costs. Watch for a rate above the current one.
CFPB: Using home equity to meet financial needsChecked November 5, 2026 · high confidence
Home equity loans usually have a fixed rate. All three use the home as security. Lenders typically require keeping 10% to 20% equity.
CFPB research: Cash-out refinance mortgages and their borrowers, 2013 to 2023Checked November 5, 2026 · high confidence
A cash-out refinance takes the place of the original mortgage. Home equity loans and HELOCs leave the first mortgage in place.
CFPB: What is a Loan Estimate?Checked November 5, 2026 · high confidence
Shows the rate, monthly payment and total closing costs. A HELOC gets Truth in Lending disclosures instead.
IRS Publication 936 (2025): Home Mortgage Interest DeductionChecked November 5, 2026 · high confidence
Home equity loan and line of credit interest is deductible only when the money buys, builds or substantially improves the home that secures the loan.
Frequently asked questions
What is the difference between a HELOC and a home equity loan?
A HELOC is a credit line. You borrow what you need, up to a limit, during a set number of years. The rate usually changes. A home equity loan pays you one amount at once. Its rate is usually fixed, so the payment stays the same.
Why can a cash-out refinance cost more even with a lower rate than a HELOC?
A cash-out refinance pays off your current mortgage. The new rate then applies to everything you owe, not only the new cash. If your current rate is lower, you pay more interest on the old balance.
When does a cash-out refinance make sense?
When its rate is close to or below your current mortgage rate. You also need to keep the loan long enough to make up its closing costs. The calculator shows the refinance rate at which it becomes the cheapest.
Can I lose my home with a HELOC?
Yes. All three loans use your home as security. The CFPB says that if you fall behind or cannot repay a HELOC on schedule, you could lose your home.
Is HELOC or home equity loan interest tax deductible?
IRS Publication 936 says this interest is deductible only in one case. The money must be used to buy, build or substantially improve the home that secures the loan. Ask a tax professional about your case.
Where do I find closing costs to enter?
For a home equity loan or a refinance, use the total closing costs on your Loan Estimate. A HELOC does not come with a Loan Estimate. Ask the lender to list its fees in writing.
What happens when the HELOC borrowing years end?
The CFPB says you stop borrowing and start a repayment period. Payments are often much higher then. Some HELOCs require the whole balance at once.
How much can I borrow against my home?
The CFPB says lenders typically require you to keep at least 10% to 20% of your home value as equity. Equity is what your home is worth minus what you owe.