★ COMPARISONS · REFINANCE VS HOME EQUITY LOAN · 2026
On $50,000.00 of cash from a $300,000 mortgage at 7.00% with 25 years left, the 6.25% cash-out refinance costs $2,155.01 a month and the HELOC route costs $2,474.50 — the refinance wins by $24,407.48 over 10 years. This one is the REFINANCE-VS-HOME-EQUITY-LOAN comparison — a 6.25% refinance with $5,000 closing against an interest-only HELOC draw — the cash-out-refinance-vs-heloc page is the CASH-OUT-REFINANCE-VS-HELOC comparison — a 6.50% refinance with 2% closing against a HELOC amortized from day one — not this one; the mortgage-refinance-calculator page is the REFINANCE tool — the payment on one refinance — not the comparison; and the home-equity-loan-calculator page is the HOME-EQUITY-LOAN tool — one home equity loan — not the comparison.
Put your cash need, refinance rate, HELOC rate, horizon and closing costs in: $50,000.00 at 6.25% vs 8.50% over 10 years is $2,155.01 a month for the refinance and $2,474.50 for the HELOC route. The rates decide it — change one and the winner can flip.
It means that, over 10 years, the cash-out refinance costs $24,407.48 less than the HELOC route — on $50,000.00 of cash from a $300,000 mortgage at 7.00% with 25 years left. The refinance costs $2,155.01 a month and $208,433.22 over 10 years (interest plus the $5,000.00 closing costs), while keeping the mortgage and taking a $50,000.00 HELOC at 8.50% costs $2,474.50 a month and $232,840.70 over the same 10 years. The refinance is cheaper every month ($319.49 less) and cheaper in total — and it breaks even on the closing costs in month 16. That is the whole comparison: one new loan at a lower rate against the old loan plus a line of credit at a higher one.
The refinance wins because its rate beats both of the others. The new loan is 6.25%, the mortgage it replaces is 7.00%, and the HELOC is 8.50% — so the refinance is cheaper than the mortgage on the $300,000 you already owe and cheaper than the HELOC on the $50,000 you need. That is why it wins at every cash need from $0 to $200,000: even with no cash needed at all, refinancing the $300,000 alone wins by $10,969.37 over 10 years. The HELOC only wins when the refinance rate is no longer the cheapest — at a 7.00% refinance rate the HELOC route wins by $1,929.69, because the refinance no longer beats the mortgage it replaces.
The horizon decides whether the closing costs are worth paying. Over 10 years the refinance wins by $24,407.48, and over 5 years it still wins by $10,975.76. But over 1 year the HELOC route wins by $1,654.23 — the $5,000.00 of closing costs is not yet recovered, because the monthly saving is only $319.49. The break-even month is 16: before month 16 the refinance has cost more than it has saved, after it every month is profit. If you might sell or refinance again within a year or two, the HELOC route is the cheaper way to get the cash.
The HELOC payment jumps when the draw ends. During the 10-year draw the HELOC costs only the interest — $354.17 a month on $50,000.00 at 8.50% — and the balance never falls. In year 11 the repayment starts and the payment jumps to $433.91 a month, amortized over 20 years. The HELOC route's monthly payment in the table is the draw-period payment; the real cost of the HELOC is the interest during the draw plus the repayment after it, and the 10-year comparison only counts the draw. If you keep the HELOC past year 10, the comparison changes — run the horizon longer and watch the winner.
On the defaults: $50,000 cash, existing $300,000 at 7.00% with 25 years left, refinance 6.25% on $350,000 over 30 years, HELOC 8.50%, 10-year horizon, $5,000 closing.
And the other way: a HELOC at 3.6185% ties the two routes (at that rate the two routes sit $0.02 apart over 10 years — essentially a tie, because the rate is rounded to 4dp), the refinance's lead reaches $25,000.00 at a $52,204.63 cash need, and the refinance breaks even in month 16.
The defaults are $50,000 of cash from a $300,000 mortgage at 7.00% with 25 years left. The refinance is a new 30-year fixed loan at 6.25% on $350,000 ($300,000 owed plus $50,000 cash), with $5,000 of closing costs paid at closing — Freddie Mac's average estimate; the broader 3–6% range would be $10,500–$21,000 on a $350,000 loan, so get a Loan Estimate before you decide. The HELOC is $50,000 at 8.50% with a 10-year draw, interest-only, then a 20-year repayment amortized at the same rate; the rate is assumed fixed, though real HELOC rates are usually variable and can rise. The comparison counts interest and closing costs over the horizon only — it does not count the principal repaid (both routes repay principal, at different speeds), property tax, insurance, or what the cash is spent on. The rates are illustrative October 2026 levels: Freddie Mac's 30-year fixed averaged 7.28% the week ending October 1, 2026. There is no cash need at which the routes tie at these rates — the refinance wins from $0 to $200,000 — so the cash reverse is framed as the cash need where the refinance's lead reaches $25,000 instead. The tie rate is rounded to 4dp, so at 3.6185% the two routes sit $0.02 apart.
These notes repeat in every explainer section because this page is built to be read start to finish: the refinance wins because its rate beats both of the others; the horizon decides whether the closing costs are worth paying; and the HELOC payment jumps when the draw ends.
| Output | Formula | What it means |
|---|---|---|
| Refinance payment | new loan × r ÷ (1 − (1 + r)^−360) | $2,155.01 — $350,000.00 at 6.25% over 30 years. |
| HELOC route payment | existing mortgage + HELOC interest-only | $2,474.50 — $2,120.34 + $354.17. |
| Refinance 10-year cost | interest in 10 years + closing costs | $208,433.22 — $203,433.22 + $5,000.00. |
| HELOC route 10-year cost | mortgage interest + HELOC interest | $232,840.70 — $190,340.70 + $42,500.00. |
| Winner (10 years) | lower 10-year cost wins | Refinance by $24,407.48 — $208,433.22 vs $232,840.70. |
| Break-even month | closing costs ÷ monthly saving | 16 months — $5,000.00 ÷ $319.49. |
| HELOC payment after draw | HELOC amortized over 20 years | $433.91 — $50,000.00 at 8.50% over 20 years. |
| Reverse: HELOC rate tying the two routes | step | 3.6185%: Refinance: $2,155.01 a month, $208,433.22 of interest and closing over 10 years. HELOC route: $2,271.11 a month, $208,433.20 over 10 years. The HELOC route wins by $0.02 over 10 years. |
| Reverse: Cash need where the refi lead hits $25,000 | step | $52,204.63: Refinance: $2,168.58 a month, $209,714.63 of interest and closing over 10 years. HELOC route: $2,490.12 a month, $234,714.64 over 10 years. The refinance wins by $25,000.00 over 10 years. |
| Reverse: Break-even month for the refinance | step | 16 months: At 16 months the refinance has cost $39,480.16 in all and the HELOC route $39,592.07, so the refinance is ahead by $111.90. |
| HELOC at 7.50% instead of 8.50% | same model | Refinance: $2,155.01 a month, $208,433.22 of interest and closing over 10 years. HELOC route: $2,432.84 a month, $227,840.70 over 10 years. The refinance wins by $19,407.48 over 10 years. |
| HELOC at 9.50% instead of 8.50% | same model | Refinance: $2,155.01 a month, $208,433.22 of interest and closing over 10 years. HELOC route: $2,516.17 a month, $237,840.70 over 10 years. The refinance wins by $29,407.48 over 10 years. |
| $25,000 cash instead of $50,000 | same model | Refinance: $2,001.08 a month, $193,902.28 of interest and closing over 10 years. HELOC route: $2,297.42 a month, $211,590.70 over 10 years. The refinance wins by $17,688.43 over 10 years. |
| $100,000 cash instead of $50,000 | same model | Refinance: $2,462.87 a month, $237,495.11 of interest and closing over 10 years. HELOC route: $2,828.67 a month, $275,340.70 over 10 years. The refinance wins by $37,845.59 over 10 years. |
| 5-year horizon instead of 10 | same model | Refinance: $2,155.01 a month, $110,980.96 of interest and closing over 5 years. HELOC route: $2,474.50 a month, $121,956.71 over 5 years. The refinance wins by $10,975.76 over 5 years. |
| Refinance at 7.00% instead of 6.25% | same model | Refinance: $2,328.56 a month, $234,770.39 of interest and closing over 10 years. HELOC route: $2,474.50 a month, $232,840.70 over 10 years. The HELOC route wins by $1,929.69 over 10 years. |
| $0 cash needed | same model | Refinance: $1,847.15 a month, $179,371.33 of interest and closing over 10 years. HELOC route: $2,120.34 a month, $190,340.70 over 10 years. The refinance wins by $10,969.37 over 10 years. |
| HELOC at 6.25% — the refi rate | same model | Refinance: $2,155.01 a month, $208,433.22 of interest and closing over 10 years. HELOC route: $2,380.75 a month, $221,590.70 over 10 years. The refinance wins by $13,157.48 over 10 years. |
| 1-year horizon | same model | Refinance: $2,155.01 a month, $26,758.84 of interest and closing over 1 years. HELOC route: $2,474.50 a month, $25,104.61 over 1 years. The HELOC route wins by $1,654.23 over 1 years. |
| $200,000 cash needed | same model | Refinance: $3,078.59 a month, $295,618.88 of interest and closing over 10 years. HELOC route: $3,537.00 a month, $360,340.70 over 10 years. The refinance wins by $64,721.82 over 10 years. |
Figures are the model's own totals on the numbers you type, computed from unrounded values: each payment is the standard amortization formula, the interest over the horizon is the payments minus the principal repaid in that time, and the HELOC is interest-only through the 10-year draw and amortized over 20 years after it. The displayed figures are rounded to 2dp. The tie rate is rounded to 4dp, so at 3.6185% the two routes sit $0.02 apart — the exact tie rate is 3.618504%. The cash reverse is the smallest whole-cent cash need whose lead reaches $25,000. The model assumes fixed rates for the whole horizon — real HELOC rates are usually variable — and it counts interest and closing costs only, not the principal repaid, tax, insurance, or fees. Closing costs are $5,000 on the defaults, Freddie Mac's average estimate; real costs run 3–6% of the loan. This page is a calculation tool, not financial advice: talk to a mortgage adviser and compare Loan Estimates before you refinance or open a HELOC.
On $50,000.00 of cash from a $300,000 mortgage at 7.00% with 25 years left, the 6.25% cash-out refinance costs $2,155.01 a month and $208,433.22 over 10 years, while the HELOC route costs $2,474.50 a month and $232,840.70 — the refinance wins by $24,407.48. Closing costs $5,000 (Freddie Mac average estimate). Source: Bright Side Kit, brightoolbox.com.
On the defaults, refinance — it costs $2,155.01 a month and wins by $24,407.48 over 10 years. The refinance is cheaper because 6.25% beats both the 7.00% mortgage and the 8.50% HELOC.
3.6185% — at that rate the two routes cost the same over 10 years. Any HELOC above it loses to the refinance; any below it wins.
16 months on the defaults — $5,000 of closing costs divided by $319.49 of monthly saving. Stay past month 16 and the refinance is ahead; sell before it and the HELOC route was cheaper.
About $5,000 on average, per Freddie Mac — the broader range is 3% to 6% of the loan, $10,500 to $21,000 on $350,000. Get a Loan Estimate from each lender; some costs are negotiable.
It jumps — from $354.17 of interest-only a month to $433.91 amortized over 20 years. During the 10-year draw the balance never falls, so the repayment is the first time you pay the $50,000 back.
Yes — the new loan runs 30 years from the refinance, even though the old one had 25 years left. The lower rate still wins over 10 years here, but the longer term is part of why the monthly payment falls.
Yes — over 1 year the HELOC route wins by $1,654.23, because the $5,000 of closing costs is not yet recovered. The horizon, not the rate, decides short stays.
Usually, yes — most HELOC rates are variable and move with the prime rate. This calculator holds the rate fixed; if it rises, the HELOC route gets worse and the refinance lead grows.