Refinance & Home Equity

Options

Refinancing or tapping into home equity can serve very different goals, from changing your loan terms to accessing cash for major expenses, debt consolidation, renovations, or other financial needs.

Refinancing designed to change the interest rate, loan term, or both without taking significant cash out of the property.

A refinance option that replaces the existing mortgage with a new loan and may allow eligible homeowners to access a portion of their available equity in cash.

A revolving line of credit secured by your home that may allow you to borrow against available equity as needed during the draw period.

A second-lien loan that may provide eligible homeowners with a lump-sum amount based on available home equity, typically with a separate payment from the first mortgage.

Which way should you tap your equity?

Same home, same equity, four different tools. The right one depends on three things: whether you want to keep your current mortgage, how much you need, and whether you need it all at once or over time.

Quick guide

Want to keep your current mortgage as it is?
A HELOC or home equity loan sits alongside it as a separate loan.
Need a lump sum for a specific project?
A home equity loan or cash-out refinance can deliver it in one payment.
Want to borrow as you go?
A HELOC works like a credit line you draw from during the draw period.
Want one new loan with a better rate or term?
A rate/term refinance or cash-out refinance replaces your current mortgage.

Worth knowing before you choose:

A cash-out refinance replaces your whole mortgage, so the new rate applies to your entire balance, not just the cash you take out.
A HELOC or home equity loan leaves your first mortgage in place but adds a second payment.
All four options use your home as collateral, so it’s worth borrowing only what you can comfortably repay.
HELOCs often have variable rates, while home equity loans often have fixed rates. Terms vary by lender.

Not sure which one fits? That’s what the call is for. If you’re self-employed, your income can be documented differently.

See our 1099 loans or other loan options.

What to have ready

Your most recent mortgage statement
A rough idea of your home’s value and how much you’d like to borrow
Income documents, such as pay stubs and W-2s, or the program’s self-employed documents
Recent bank statements
Photo ID

What it looks like in real life (example for illustration only)

Chris is a Denver homeowner with a low-rate first mortgage and a kitchen remodel coming up. A cash-out refinance would have replaced his whole loan at a rate that may be higher than what he has now. We looked at keeping his first mortgage and adding a home equity loan for the remodel instead, so his original rate stayed in place. Every borrower’s numbers are different, and the right answer depends on your current loan, your goals, and the lender’s guidelines.

Refinance and home equity FAQs

What’s the difference between a HELOC and a home equity loan?
A HELOC is a revolving line of credit you can draw from as needed during the draw period. A home equity loan gives you a lump sum up front, usually with a separate payment.

Is a cash-out refinance better than a HELOC?
It depends on your current mortgage rate and your goals. A cash-out refinance replaces your whole loan, while a HELOC keeps your first mortgage in place.

How much equity can I borrow against?
Lenders typically set a limit based on your home’s value and what you owe. The amount varies by lender and program.

Do I need an appraisal?
Often, yes, though requirements vary by program and lender.

What does it cost?
Costs vary by loan type and lender and may include lender, appraisal, and title fees. We’ll go over the real numbers together before you decide.