Topic
HELOC & home equity
A HELOC, a cash-out refi, and a home equity loan all let you tap your equity, but they work very differently. Here are the tools, plus a decision aid for picking the right one.
Tools
Quick reference
| Feature | HELOC | Home equity loan | Cash-out refi |
|---|---|---|---|
| Disbursement | Line of credit | Lump sum | Lump sum |
| Rate type | Variable (usually) | Fixed | Fixed (or ARM) |
| Sits where? | 2nd lien | 2nd lien | Replaces 1st |
| Closing costs | Low (~$0–$1k) | Medium ($2–4k) | High (2–4% of loan) |
| Best for | Phased renos, runway | One-time large expense, fixed payment | When refinancing the whole mortgage makes sense |
| Typical max LTV | 85–90% | 85% | 80% |