Refinance, Cash-Out Refinance or HELOC?
Which Option Is Right for You?
As your financial goals change, your mortgage strategy may need to change, too. Whether you're looking to lower your monthly payment, access your home's equity, or finance a major project, there are several options available. Understanding the differences can help you make a more informed decision.
Rate-and-Term Refinance
Replace your current mortgage with a new loan that better aligns with your financial goals.
May Be a Good Fit If:
- Interest rates have improved
- You want to lower your monthly payment
- You'd like to shorten your loan term
- You want to switch from an adjustable-rate mortgage to a fixed-rate mortgage
Primary Goal: Improve your mortgage terms.
Cash-Out Refinance
Replace your current mortgage with a larger loan and receive the difference in cash.
May Be a Good Fit If:
- You need a significant lump sum
- You're planning a major renovation
- You want to consolidate high-interest debt
- Current rates support refinancing
Primary Goal: Access your home's equity while refinancing.
Home Equity Line of Credit (HELOC)
Keep your existing mortgage and access a revolving line of credit secured by your home's equity.
May Be a Good Fit If:
You need flexibility
You're funding expenses over time
You want to borrow only what you need
You have a low mortgage rate you want to keep
Primary Goal: Access home equity without replacing your current mortgage.
A Quick Comparison
| Rate-and-Term Refinance | Cash-Out Refinance | HELOC | |
|---|---|---|---|
| Replace Existing Mortgage? | Yes | Yes | No |
| Access Cash? | No | Yes | Yes |
| Lump Sum? | No | Yes | Optional |
| Keep Current Mortgage Rate? | No | No | Yes |
| Best For | Lowering payments or changing terms | Large one-time expenses | Flexible ongoing expenses |
Not Sure Which Option Is Right for You?
The best solution depends on your current mortgage, available equity, financial goals, and long-term plans.
Our team can help you evaluate your options and develop a strategy that works for you.
