Cash Out Refinance VS. Home Equity Loan – Discusses The Differences

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A recent article from Loan Love helps borrowers decide what the best way to access their home equity is. is a borrower advice website that provides detailed insights into the mortgage industry in a fun and entertaining way. The team at is devoted to help empower both first time and experienced homeowners with valuable resources, first-class knowledge and connections to top-rated industry professionals and has the mission of helping consumers and borrowers to obtain the latest information on mortgage lending trends, the real estate market and the U.S. financial landscape in order to help them obtain a home loan that they will love. To help loan borrowers get the latest scoop on mortgage loan news, the loan advice website is constantly providing readers with guide videos and articles when it comes to their mortgage inquiries. Their newest featured article titled “Cash Out Refinance vs Home Equity Loan (Key Differences)” addresses both refinance and home equity line of credit advantages and disadvantages.

First of all, the article explains that, while both loan options will allow the homeowner to gain access to the equity they have built in their home, each loan type has its own set of pros and cons that should be considered. The article says:

“A refi loan is simply a brand-new mortgage that replaces your old mortgage, while a home equity loan is a loan in addition to your existing mortgage. That means that with a home equity loan, you’ll still be paying your regular mortgage and you’ll also need to pay the monthly payment for your home equity loan. The biggest “pro” in favor of a cash-out refi: Since a refi is a first-position mortgage – that is, it’s the primary loan on your home – the interest rates are usually lower. Shopping for a refi is pretty much the same as shopping for any other mortgage, and you have access to the same low rates as someone who’s buying a home. The biggest “pro” favoring a home equity loan is also the biggest “con” associated with a refinance loan: Home equity loans have no closing costs, and that can mean a savings of hundreds – even thousands – of dollars compared to a cash-out refinance loan, which typically comes with all the same closing costs as a purchase mortgage.”

This being said, there are some common sense elements to take into account if borrowers wish to find the best deal. For example, if the borrower cannot afford to pay for an additional loan each month on top of their normal monthly mortgage payments, then a home equity loan is definitely out of the question. Also, a cash out refi with a higher rate than the homeowner’s current mortgage will only make sense if the borrower really desperately needs the money. Paying all the associated closing costs also may be a bad deal if the borrower plans to move in a few years. There are many things to consider when it comes to the cash out refi vs. HELOC debate.

For more information on the what to consider when choosing between these two loan types, please read the full guide on

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Kevin Blue
Loan Love
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