Financing tools
HELOC vs. Cash-Out Refinance
A HELOC leaves your existing mortgage untouched and adds a second loan against your equity. A cash-out refinance replaces the whole mortgage — including its rate. See both side by side.
Direct answer: if your existing mortgage rate is well below current rates, a HELOC lets you access equity without disturbing it. A cash-out refinance consolidates into one loan but resets the rate on your entire balance, not just the cash portion. Enter your numbers to compare total monthly payment and interest.
Existing mortgage & cash needed
Option A — HELOC
Option B — cash-out refinance
Option A — HELOC
- $1,667
- Existing mortgage payment (unchanged)
- $609
- HELOC payment
- $2,276
- Total monthly payment
- $160,419
- Total interest at year 10
Modeled as a fully amortizing loan on the cash needed. Real HELOCs often have an interest-only draw period before a repayment period — not modeled here.
Option B — Cash-out refinance
- $360,000
- New loan amount
- $2,395
- Total monthly payment
- $236,335
- Total interest at year 10
Replaces the entire existing mortgage — including its rate — with one new loan, not just the cash portion.
What you're really giving up
Cash-out refinancing resets the rate on money you already borrowed.
The comparison above focuses on payment and interest, but it’s worth sitting with what each option costs you structurally — a HELOC preserves a low first-mortgage rate, while a cash-out refinance folds everything into one new rate and starts the clock over.
Methodology
How this comparison works.
- HELOC path— your existing mortgage payment and rate are unchanged. The HELOC itself is modeled as a fully amortizing loan on the cash needed, for simplicity; real HELOCs often have a separate interest-only draw period before a repayment period begins, which isn’t modeled here.
- Cash-out refinance path — one new loan for the existing balance plus the cash needed, at a new rate and term. This resets the rate on your entire balance, not just the new cash.
Neither path’s closing costs are modeled — both typically carry some, which would add to the real comparison.
Worked example (hypothetical)
A $300,000 existing mortgage at 4.5% with 25 years remaining, needing $60,000 in cash: a HELOC at 9% over 15 years adds roughly $609 a month to the unchanged existing payment of roughly $1,668 — a total of roughly $2,276. A cash-out refinance into a new $360,000 loan at 7% over 30 years runs roughly $2,395 a month. Over a 10-year horizon, the HELOC path shows roughly $160,419 in total interest versus roughly $236,335 for the refinance — largely because the refinance resets the rate on the entire $300,000 balance, not just the $60,000 needed.
Downside cases
- HELOC rates are often variable and can rise, increasing the payment on the outstanding balance.
- A cash-out refinance that raises your rate on the entire balance can cost significantly more over time than a second loan on just the cash needed, especially if your existing rate is well below current rates.
National considerations
HELOC and cash-out refinance rates, terms, and loan-to-value limits vary by lender and change with broader lending conditions.
Utah considerations
Home equity and available loan-to-value room vary by property and Utah county appreciation trends.
Author: Todd McClean, Realtor® | Real Estate Investment Strategist, Mountainland Realty, Inc.. Reviewed July 19, 2026. This tool provides general real estate information and is not legal, tax, accounting, lending, securities, commodities, or financial-planning advice.
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