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HELOC vs Home Equity Loan vs Cash-Out Refinance: Which Costs Less?
Enter your current mortgage and the cash you need. See the combined monthly payment, upfront cost and total cost of all three ways to tap equity, side by side.
Direct answer: if your current first-mortgage rate is well below today’s rates, a HELOC or fixed second mortgage usually costs less because it leaves that low rate in place. A cash-out refinance tends to win when the new rate is close to your current rate or you want one fixed payment. A HELOC is the most flexible but usually has a variable rate.
Zach Brown, NMLS #2156538Senior Mortgage Loan Officer, DreamLux Home Loans. Reviewed and updated October 23, 2026.
Three ways to tap equity
- HELOC
- Line of credit, usually variable, draw as needed. First mortgage stays.
- Fixed second
- Lump sum at a fixed rate and payment. First mortgage stays.
- Cash-out refi
- One new, larger first mortgage that replaces your current loan.
- Limit
- Combined loan-to-value, commonly capped between 80% and 90%.
- Decide on
- Total cost over the years you keep it, not payment alone.
Educational estimate only. Not a rate quote or commitment to lend.
Free tool · Nothing is sent
Home equity comparison calculator
Sample rates are shown so you get a result right away. Replace them with quotes you have, or ask Zach to price all three.
Your home today
Combined loan-to-value: 75%
1HELOC
2Fixed second mortgage
3Cash-out refinance
Lowest total cost over 7 years
n/a
Mortgage payment today$0
HELOC, total monthly$0
Fixed second, total monthly$0
Cash-out refi, monthly$0
Total cost = interest on everything you owe on the home over the years selected, plus closing costs. HELOC figures assume today’s sample rate holds; a variable rate can rise or fall.
Have Zach price all three
Total cost by how long you keep it
| Years | HELOC | Fixed second | Cash-out refi | Lowest |
|---|
Total cost includes interest on your current first mortgage for the HELOC and fixed second, since that loan stays in place, and interest on the new loan for the cash-out refinance.
Free · Replies come from Zach
Get all three priced on your actual home
Sample rates show the trade-off. Zach prices the real options for your Missouri or Kansas property across 280+ wholesale lenders, including lenders that offer fixed seconds most banks do not.
- Keep-or-replace check: whether your current first-mortgage rate is worth protecting.
- Rate type explained: HELOC index, margin, caps, draw period and any annual or early-closure fees.
- Combined loan-to-value matched to the lenders that allow the amount you need.
Paying off debt? Mention it in the timeline field and Zach will compare the payment change against the cards or loans being paid off.
Received
Got it, thanks. Zach has your numbers.
- Zach reviews the scenario you ran and replies by text and email during business hours.
- If a different structure would cost less over the time you expect to keep the loan, he’ll price it across 280+ wholesale lenders.
- Ready now? The application takes about 12 minutes and doesn’t obligate you to anything.
How they compare
How do a HELOC, a home equity loan and a cash-out refinance compare?
| HELOC | Fixed second (home equity loan) | Cash-out refinance | |
|---|---|---|---|
| Current first mortgage | Stays in place | Stays in place | Paid off and replaced |
| Rate | Usually variable | Fixed | Usually fixed |
| How you get the money | Draw as needed | Lump sum | Lump sum at closing |
| Payment | Often interest only at first, then rises | Fixed until paid off | One payment for the whole balance |
| Closing costs | Low to moderate | Moderate | Highest |
| Usually fits | Projects paid over time, flexible needs | A set amount with a fixed payoff date | Large amounts when the new rate is near your current rate |
Worked example
A Columbia homeowner owes $300,000 at 4% with 25 years left on a $500,000 home and wants $75,000. With the sample rates above, the fixed second adds about $651 a month and keeps the 4% loan; the cash-out refinance replaces it with a $382,500 loan at 6.75%, about $2,481 a month versus $1,584 today plus the second. Over 7 years the option that keeps the 4% loan costs far less in interest.
Watch the HELOC payment
Interest-only draw periods keep the early payment low. When the draw period ends, the balance starts amortizing and the payment can jump. Switch the HELOC payment setting to 20-year repayment to see that number now.
Related tools
Refinance calculator for a rate-and-term refinance, home value estimate for the value input, and refinance options in Missouri and Kansas.
Direct answers
Home equity questions
What is the difference between a HELOC and a home equity loan?
A HELOC is a revolving line of credit, usually with a variable rate and an interest-only draw period, so the payment can change. A home equity loan, also called a fixed second mortgage, pays you a lump sum at a fixed rate with a set payment and payoff date. Both sit behind your current first mortgage, which stays in place.
When does a cash-out refinance make more sense than a HELOC?
Usually when the new first-mortgage rate is close to or below your current rate, or when you need a large amount and want one fixed payment. If your current first mortgage has a much lower rate than today’s rates, keeping it and adding a HELOC or fixed second often costs less. The calculator above compares the total cost of all three over the years you choose.
How much equity can I borrow against in Missouri or Kansas?
Lenders cap the combined loan-to-value, which is everything you owe on the home divided by its value. Many lenders cap it somewhere between 80 and 90 percent, and the limit varies by lender, credit, occupancy and property type. The calculator shows your combined loan-to-value as you change the cash amount.
Are HELOC rates fixed or variable?
Most HELOCs carry a variable rate tied to the prime rate, so the payment moves when that index moves. Some lenders let you lock a portion of the balance at a fixed rate. A fixed second mortgage and most cash-out refinances have a fixed rate for the life of the loan.
Do HELOCs and home equity loans have closing costs?
Often yes, though they are usually lower than a cash-out refinance. Some HELOCs have annual fees or early-closure fees. Enter each option’s costs in the calculator so they are counted in the total cost.
Is HELOC or home equity loan interest tax-deductible?
It depends on how the money is used and your tax situation. DreamLux does not give tax advice, so ask a qualified tax professional before counting on a deduction.
Background: CFPB: What is a HELOC?. More tools: all Missouri and Kansas mortgage tools.
Written and reviewed by
Zach Brown, Senior Mortgage Loan Officer
Zach built DreamLux Home Loans as a wholesale broker for Missouri and Kansas, statewide in both. Many of his homeowners locked low rates years ago, so the first question on any equity request is whether that rate is worth keeping. This calculator is the same comparison he runs before quoting.
Next step
Not sure your home value is right? Check it first.
Combined loan-to-value drives which options are available. Start with a home value estimate, then have Zach price the structure that fits.
Zach Brown | NMLS #2156538 | DreamLux Home Loans, a DBA of NEXA Lending, LLC | NMLS #1660690 | Equal Housing Lender | Licensed in Missouri & Kansas
Educational estimates only. This calculator is not an offer of credit, a rate quote or a commitment to lend. Sample rates are for illustration and are not DreamLux rates. HELOC rates are usually variable and can change. Combined loan-to-value limits, fees and availability vary by lender, credit, occupancy and property. Not all applicants qualify. Consult a tax professional about deductibility.
