HELOC vs Cash-Out Refinance Calculator
Pulling equity has two common paths. This compares the full cost of each over the years you actually plan to hold the debt — keeping your existing mortgage and adding a HELOC, versus refinancing the whole balance with cash out.
Cash-out refinance
HELOC (second lien)
Cheaper over your horizon
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Enter your details and compare.
"Cost over horizon" = interest paid plus upfront costs during the years you hold the debt. The HELOC path keeps your existing mortgage untouched; the refi path replaces it entirely. Assumes a fixed HELOC rate — real HELOCs are usually variable.
Why the comparison depends on your horizon
The HELOC-versus-refinance question almost never has a universal answer, because the two options front-load and spread out costs differently. A cash-out refinance usually carries several thousand dollars in closing costs but may offer a lower rate on the borrowed money. A HELOC typically has little or no upfront cost but a higher, variable rate. Which wins depends entirely on how long you keep the debt.
That's why this calculator asks for your real planning horizon and compares the total cost — upfront plus interest — over exactly that window, rather than quoting a single monthly payment in isolation.
The crucial detail most calculators miss
A cash-out refinance doesn't just finance the new cash. It refinances your entire existing balance at the new rate. If you locked a low rate years ago, refinancing the whole loan to access a little cash can cost far more than the closing costs suggest, because every dollar of your existing balance now accrues interest at the higher new rate.
This tool accounts for that. The HELOC path leaves your existing mortgage exactly as it is and adds a separate second loan only for the cash you need. The refinance path replaces the whole mortgage. The comparison is between two complete situations, not two loans in a vacuum.
How the cost is calculated
For each path, over your horizon of H months:
HELOC cost = interest on existing balance over H
+ interest on cash at HELOC rate over H + HELOC fees
Interest for each month is the outstanding balance times the monthly rate, summed across the horizon. The path with the lower total is the cheaper option for the period you specified.
Frequently asked questions
Which is better if I have a very low existing rate?
Usually the HELOC. Refinancing a sub-4% mortgage into a 6%+ rate just to access equity means re-pricing your entire balance upward, which the closing-cost figure alone hides. The calculator will surface this in the totals.
What if I'll only need the money for a couple of years?
Short horizons tend to favor the HELOC because you avoid large upfront closing costs. Long horizons can favor the option with the lower rate, since interest accumulates. Try a 2-year and a 10-year horizon to see the crossover.
Does this include tax effects?
No. Interest deductibility depends on how you use the funds and your tax situation. Treat the result as a pre-tax comparison and consult a tax professional for your specifics.