Pick the Right Home Equity Loan Option

Compare loan types to know which option fits your needs

Refinance Cash-Out

A refinance cash-out, or a cash-out refinance, allows you to refinance your mortgage for more than the outstanding amount of your original mortgage, and receive the difference between the two amounts in cash. A refinance cash-out is a good option if the market value of your home exceeds the existing mortgage debt by a comfortable margin and refinancing into a loan with a lower interest rate, or if you have paid off your mortgage and want to cash out some of the equity.

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Home Equity Line of Credit (HELOC)

A home equity line of credit, HELOC, is a credit line secured against the equity in your home. A line of credit is a type of revolving credit, meaning the interest rate will vary, and you can pay down and reuse the credit up to the limit as long as the line remains open, similar to a credit card. A HELOC is a good option if you want to have an open line of credit available for you to pay for home repairs or other unexpected expenses.

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Second Mortgage Cash-Out

A second mortgage cash-out, also known as a home equity loan, helps you leverage the equity in your home without refinancing your first mortgage. The money will be paid to you in a lump sum that you will then pay back over a fixed amount of time — typically between 10 and 20 years. The new mortgage will take a secondary position behind your primary mortgage.

Getting a second mortgage cash-out is a good option if there’s a prepayment penalty associated with your first mortgage, or if interest rates have increased, and therefore you don’t want to refinance your existing mortgage.

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