{"id":28250,"date":"2022-03-31T12:30:10","date_gmt":"2022-03-31T19:30:10","guid":{"rendered":"https:\/\/financer.com\/?p=28250"},"modified":"2024-11-21T20:45:43","modified_gmt":"2024-11-22T04:45:43","slug":"cash-out-refinance-vs-heloc","status":"publish","type":"post","link":"https:\/\/financer.com\/loans\/articles\/cash-out-refinance-vs-heloc\/","title":{"rendered":"Cash-Out Refinance vs HELOC"},"content":{"rendered":"\n

Getting access to your home’s equity could be a cost-effective method to achieve your dreams, whether you need money to pay off debt<\/a>, fund a home improvement, or a life event.<\/p>\n\n\n\n

It’s difficult, however, to understand where to begin when there are so many loans and refinance options available. <\/p>\n\n\n\n

To help you decide which option is best, we’ll discuss cash-out refinances vs HELOCs<\/strong>, also known as home equity lines of credit.<\/p>\n\n\n

Compare HELOC rates here<\/a><\/div>\n\n\n

HELOC vs Cash-Out Refinance: Definition<\/h2>\n\n\n\n

You earn equity in your home<\/a> as your mortgage continues. Your home’s equity<\/a> is the difference between what is currently standing in your home loan, and its value.<\/p>\n\n\n

<\/div>Let’s say you bought your house for $400,000 and are now paying your mortgage debt of $250,000 after making payments for a few years. You now have $150,000 in equity in your house assuming that the value of your home is still $400,000.<\/div>\n\n\n

By enabling you to access and utilize a portion of your home’s equity<\/a> for your next endeavor, HELOCs and cash-out refinancings both capitalize on its equity.<\/p>\n\n\n\n

Cash-Out Refinance<\/h3>\n\n\n\n

To get access to the equity in your home, cash-out refinancing is a kind of mortgage refinancing where you can take out a higher mortgage<\/a>. <\/p>\n\n\n\n

One way a cash-out refinance differs from a second mortgage is that it does not increase your monthly installment, but the loan’s length. You simply begin paying off your new mortgage<\/a> after you’ve paid off your old one.<\/p>\n\n\n\n

The steps of a cash-out refinance are essentially the same as those of your main mortgage. You pick a lender, submit your application, supply proof, and get approved. That’s it!<\/p>\n\n\n\n

Below are some of the requirements:<\/p>\n\n\n\n