HELOC vs Cash-Out Refinance 2027 Comparison

Compare HELOC vs cash-out refinance 2027 — HELOC keeps first mortgage rate, variable; cash-out refi resets entire loan to current rates with closing costs.

HELOC Pros

Keeps existing low-rate first mortgage. Pay interest only initially. Use only what you need. Lower closing costs ($500-2k vs $10-20k for refi).

HELOC Cons

Variable rate. Can rise. Draw period ends → repayment period (jumps payment). 10-year draw + 20-year repay typical.

Cash-Out Refi Pros

Locks in fixed rate. Single payment. Can extend term. Predictable budget.

Cash-Out Refi Cons

Resets clock. If you had 3.75% first mortgage from 2021, you give it up for current 6-7%. Closing costs $10-20k.

Source: cfpb.gov HELOC vs Refi consumer guide. Last updated: May 2026.