HELOC vs Cash Out Refinance calculator
Both a HELOC and a cash out refinance turn home equity into cash, but they change your mortgage picture in very different ways. This calculator compares keeping your existing mortgage untouched and adding a HELOC on top, against replacing that entire mortgage with one new, larger loan.
less total interest than the cash out refinance
- •With the HELOC, your existing $1,556 mortgage payment stays exactly as is, and you add a $317 interest only HELOC payment on top, for a combined $1,873 a month during the interest only period.
- •With the cash out refinance, that old payment disappears entirely, replaced by one new payment of $2,076 a month on the combined balance.
- •Over the life of each path, total interest runs $274,384 for the HELOC route versus $427,185 for the cash out route, a difference of $152,801 in favor of the HELOC.
| Metric | HELOC path | Cash out refinance |
|---|---|---|
| Monthly payment | $1,873 then $1,929 | $2,076 |
| Payoff horizon | 30 years | 30 years |
| Cash needed at closing | $0 | $8,000 |
| Total interest, existing loan plus new borrowing | $274,384 | $427,185 |
| Total cost, interest plus closing costs | $274,384 | $435,185 |
A HELOC keeps your existing first mortgage rate untouched and adds a second lien (a separate loan against the same home) on top of it, usually at a variable rate. A cash out refinance replaces the whole first mortgage with one new loan at one new rate, for better or worse depending on where that new rate lands compared to your old one. The HELOC totals here assume only the interest only minimum gets paid during those years -- paying extra toward the balance any time during that stretch, which most HELOCs allow, would lower the real total interest paid. Most HELOC lenders do not charge a penalty for paying off the balance early, but terms vary by lender, so it is worth confirming yours rather than assuming.
A free account keeps your numbers ready across every calculator, no re entering them each time.
How this calculator works
- Step 1Enter your existing mortgage
Balance, rate, years left, and your home value.
- Step 2Enter both new options
HELOC rate and structure for option A, new refinance rate and closing costs for option B.
- Step 3See your total obligation
Combined monthly payment and total interest cost for each path, side by side.
Frequently asked questions
Why would I keep my old mortgage and add a HELOC instead of just refinancing?
If your existing mortgage has a rate well below current rates, replacing it entirely with a cash out refinance means giving up that low rate on your whole balance, not just the cash you need. A HELOC leaves that original low rate mortgage completely untouched and only borrows the new amount at the new rate.
Which option is cheaper overall?
It depends entirely on your existing mortgage rate versus current rates, and the HELOC rate versus the cash out refinance rate. This calculator computes the real total interest cost for both paths using your specific numbers rather than a general rule, since the answer flips depending on those inputs.
Does a HELOC put my home at more risk than a cash out refinance?
Both are secured by your home, so both come with foreclosure risk if payments are missed. A HELOC adds a second lien on top of your first mortgage, meaning two separate loans against the same home, while a cash out refinance keeps you at one single loan, just a larger one.
Can I switch from a HELOC to a cash out refinance later?
Yes, many homeowners take a HELOC for flexibility now and later roll both the first mortgage and the HELOC balance into a single cash out refinance once rates or their plans change. That later refinance would need its own new closing costs and qualification, this tool only compares the choice as of today.
Why does the HELOC path show two different payments?
Because a HELOC itself has two phases, an interest only period and a fully amortizing repayment period, on top of your unchanged existing mortgage payment. The cash out refinance path only shows one payment since it replaces everything with a single new loan from day one.
More home equity calculators
Your available credit line, plus the interest only payment now versus the real payment once repayment starts.
Compare the payment and total interest of borrowing against your home versus an unsecured personal loan.
See what a home secured HELOC actually saves you in interest over paying off a card balance.
Every number on this page is a planning estimate, for informational and educational purposes only, not professional advice.
Before you act on any major decisions, consult a qualified accountant, tax advisor, or financial advisor who knows your full picture.