A home equity loan leaves your current mortgage in place and adds a separate loan and payment. A cash-out refinance replaces your current mortgage with a larger one and gives you the difference in cash. Which costs less depends on your existing mortgage rate and remaining term, the new offers and fees, how much you need, how long you will keep the debt, and what you will do with the money.
This comparison applies to U.S. homeowners. There is no universal rate, fee schedule, break-even period, or eligibility rule that makes one option best for everyone. A lower monthly payment is not proof of a lower total cost: the loan may last longer, and fees and interest still count.
As an Amazon Associate I earn from qualifying purchases.
How the two options work
Home equity loan: keep the first mortgage
A home equity loan is a lump-sum loan secured by the home. If you already have a mortgage, the equity loan is generally a second mortgage: your original first mortgage remains in place, and you owe a separate lender or loan balance under separate terms. The Consumer Financial Protection Bureau (CFPB) describes it as borrowing money using home equity as collateral.
Windows Errors? Fix Them Before They Spread
Repair common Windows errors and clear accumulated junk for a smoother, more stable PC - no reinstall needed.Free scan · no reinstallCrashes, No Sound, or Screen Glitches?
Random freezes, missing sound and display glitches usually trace back to one bad driver. Find and replace yours safely.Free scan · under a minuteYou receive the loan proceeds as a lump sum, then make the equity-loan payment in addition to the payment on your existing mortgage. Your first mortgage’s interest rate, balance, and scheduled payoff terms do not change just because you take out the second loan. The second loan has its own rate, repayment schedule, and potentially its own upfront costs.
#1 Best Overall
- Compact & Portable Design: This Small Excel, Word, PowerPoint, & Windows Cheat Sheet Mouse Pad measures 11.8" x 9.8", offering a portable mouse pad. Its compact size fits in bags or laptop cases, suitable for professionals, students, or travelers.
- Multi-Software Shortcut Guide: Featuring essential shortcut keys for Excel, Word, PowerPoint, & Windows, this small mouse pad provides a quick reference for frequently used shortcuts, offering a reference designed to support workflow efficiency
- Smooth & Precise Surface: The finely-textured surface ensures precise mouse control, allowing for smooth and accurate movement during work or gaming sessions.
- Durable & Non-Slip Design: This Multi-Software Shortcut Mouse Pad features stitched edges to reduce fraying. The non-slip rubber base helps keep it securely in place, and the water-resistant fabric allows for easier maintenance.
- Clear Print Quality: Displays high-resolution printing intended to remain legible through regular use and cleaning
Cash-out refinance: replace the first mortgage
A cash-out refinance pays off your existing mortgage with a new, larger mortgage. After the old balance and transaction costs are accounted for, the remaining proceeds are paid to you in cash. Your old first-mortgage terms end and the new mortgage’s rate, balance, and repayment term take their place.
The CFPB explains that a borrower replaces the existing mortgage with a bigger one and takes the difference in cash. The cash is not free equity: it is borrowed money added to the new mortgage balance. A refinance may also involve closing costs and can extend the time until the mortgage is paid off.
| What changes | Home equity loan | Cash-out refinance |
|---|---|---|
| Existing first mortgage | Stays in place | Is paid off and replaced by a larger mortgage |
| How cash is received | Lump sum from a separate loan | Difference between the new loan and amounts used to pay off the old mortgage and transaction costs |
| Monthly payments | Usually adds a separate payment alongside the first mortgage | Usually leaves one first-mortgage payment, but under new terms |
| Effect on existing mortgage rate and term | Does not change them | Replaces them with the new mortgage’s rate and term |
| Costs | May have upfront fees and costs | Has closing costs; the amount depends on the transaction |
| Collateral | The home secures the second loan | The home secures the refinanced mortgage |
| What to evaluate | The combined cost and payments for both loans | The cost of the new mortgage against keeping the old one and borrowing separately |
What determines which option costs less?
The key comparison is not simply the advertised rate on the new borrowing. For a home equity loan, account for the continuing cost of your current mortgage plus the equity loan. For a cash-out refinance, account for the new mortgage’s full cost, including the effect of replacing your current rate and extending or changing the repayment term.
- Your current mortgage rate and remaining term: A particularly favorable existing rate is valuable. A cash-out refinance replaces it, so compare the proposed rate with the rate you would give up—not just with the home equity loan’s quoted rate.
- The amount of cash you need: Compare offers for the same borrowing amount and intended use. Cash-out proceeds depend on the new loan amount, the old mortgage payoff, and transaction costs.
- Fees and closing costs: Include the quoted costs for each option. A lower rate can be offset by fees, while a loan with lower upfront costs can still cost more over time.
- Repayment term: A longer term can reduce the scheduled monthly payment while increasing the time you carry debt. It may also mean paying more total interest, depending on the loan terms.
- How long you expect to keep the debt: Compare costs over the period you realistically expect to hold the loan, as well as the overall repayment schedule. A cost that is recovered only after a long period may not suit a borrower who expects to move or refinance sooner.
- Whether you can manage the payments: The equity-loan payment comes on top of the first mortgage. A refinance changes the first-mortgage payment instead. Assess the household budget under the actual proposed terms, not an assumed rate or payment.
CFPB guidance specifically recommends considering the cash-out refinance rate relative to the current mortgage and notes that refinancing can take longer to pay off. Neither a lower monthly payment nor a lower quoted interest rate, by itself, establishes that an option is cheaper.
Rank #2
- [MULTIFUNCTIONAL]You'll get 2 pieces computer monitor memo boards that you can stick on the left and right edges of your monitor, and they're the perfect office desk organizers and accessories. Computer monitor side panels desktop organizer are suitable for home work or office,bringing convenience. Desktop memo is used to organize meeting memos, important messages, business cards, planning notes.Paste on the message board to keep track of important things and to-do items to prevent forgetting.
- [🌟HIGHLY QUALITY] The material of computer screen side note holder is transparent acrylic. Durable, simple, stylish, light weight, easy to use, not easy to fall off or break. This cute office supplies for women desk can be used for a long time. This computer desk accessories is waterproof and dirt resistance, and look simple and stylish. The transparent acrylic sticky note holder as cubicle accessories is easy to notice the context of your sticky notes.
- [📋Easy to use] Office must haves cool office gadgets for desk ready to tear, easy to install and remove, not easy to leave traces. You only need to peel off the protective film on the surface of the computer side board memo, wipe off the dust on the edge of the computer monitor, and then stick the desk essentials for women office on the right or left side of the tape, and you're done. A perfect gift for your colleagues, friends or classmates and family members or relatives
- [🏢MULTI-SCENE USE] This desk supplies computer memo board can be applied to home and office, clear your office decor for women, suitable for most computer monitors, screens and cabinets, you can put it where you think, this cute office decor serve as a reminder. Stick on the computer side. It’s a good office gadgets can remind work improve office productivity. Pasted cabinets, dressers, refrigerators, walls, etc as cubicle accessories. To make life more orderly.
- [💌NOTE] The adhesive force of the computer sticky note holder is very strong. It can not be directly pasted on the computer screen. It should pasted on the black edge of the screen. Narrow edge not recommended!!! If you are not satisfied with your purchase, or if the product is damaged or broken in transit, please let us know immediately. We will promptly solve your problem.
How to compare actual offers
Ask lenders for written estimates based on the same cash need and compare the costs on a consistent basis. There is no universal break-even horizon in the available consumer guidance; your own offers and time horizon determine the result.
- Write down the current loan. Record its unpaid balance, interest rate, remaining term, and current payment. These terms are the baseline you keep with a home equity loan and give up with a cash-out refinance.
- Specify the cash amount. Use the amount needed for the purpose, rather than comparing loans for different sums. For a refinance, distinguish the new mortgage amount from the cash you expect to receive after the old mortgage and costs are paid.
- Get full proposed terms for both choices. Request the rate, repayment term, estimated payment, and itemized upfront fees or closing costs. Federal sources cited here do not establish current market quotes or a standard fee amount; use your lenders’ actual estimates.
- Calculate the home equity loan scenario. Consider the payment and remaining cost of the current first mortgage together with the separate second-loan payment, fees, and repayment schedule. Do not treat the second-loan payment as the entire housing-debt cost.
- Calculate the refinance scenario. Consider the new mortgage payment, closing costs, new balance, rate, and full repayment schedule. Account for the interest and term on the old mortgage that the refinance would replace.
- Compare the same time period and endpoint. Estimate payments and costs through your expected holding period, and note the debt balances that would remain at that point. Then compare those results with the full scheduled cost if you kept each loan to payoff.
- Stress-test the payment. Ask whether the household could keep up if income fell or other expenses rose. A payment that works only under ideal circumstances can still put the home at risk if it becomes unaffordable.
For a simple comparison worksheet, put the current mortgage and proposed equity loan in one column, and the proposed cash-out refinance in another. Keep the cash amount and comparison period the same. List each loan’s balance, rate, term, payment, fees, projected payments over that period, and remaining balance at its end. This makes it harder to mistake a lower payment for a lower cost or to overlook the first mortgage that remains in the home equity loan scenario.
Why a lower payment may not mean lower cost
A monthly payment measures cash due on a schedule; it does not tell you how much interest you will pay or when the debt will be gone. If a cash-out refinance restarts or lengthens the mortgage payoff period, the payment may be spread across more time. If a home equity loan adds a separate payment, its combined payment with the first mortgage may be higher even when the second loan has a comparatively low rate.
Compare both the payments you must make and the outstanding balances after the period you expect to hold the debt. Also compare the cost of paying each loan according to its full schedule. The right emphasis depends on whether your priority is a manageable near-term budget, paying off debt sooner, or minimizing total borrowing cost—and whether the proposed terms actually support that priority.
Rank #3
- Stay Organized with Ease: Our To Do List Notepad provides multiple sections with plenty of space to jot down all of your important tasks.A versatile office supply perfect for daily task management, helping you keep track of everything that needs to be done and prioritize effectively.
- Achieve Your Productivity Goals: Begin each day on a positive note, reminding you of your potential, strength, and the significance of staying focused on your goals. Our Daily Checklist Notepad is the ultimate tool to streamline your daily planning and elevate your productivity. With a clear and concise overview of your tasks, you can effortlessly prioritize what truly matters and make consistent strides towards achieving your goals.
- Reliable and Stylish: Our to do list planner combines functionality with durability. With a transparent PP cover, the inner pages are well-protected from dirt and wear. Additionally, the back cover is crafted with thick paperboard, offering a stable surface for your writing needs. Each notepad includes 52 pages of high-quality, 100gsm paper, which is thick and non-bleeding, resulting in a smooth and enjoyable writing experience.
- Versatile Use: This daily checklist notepad, suitable for teacher supplies and a wide range of applications, proves invaluable in various settings including work, school, and home. Whether you need to organize your daily tasks, plan a project, or create a grocery list, this notepad serves as the ideal tool. Its compact size ensures easy portability, allowing you to conveniently carry it with you throughout your day.
- Perfect Present for Anyone: Our Daily To-Do List Notepad is the perfect present for those who value organization and productivity. With its stylish design and versatility, this office desk accessory is also a practical addition to school supplies. Suitable for students, professionals, and homemakers alike, it helps keep tasks and priorities in check effortlessly.
How each option changes your repayment timeline
With a home equity loan, your first mortgage continues on its existing schedule while the second loan is repaid separately. That can preserve the original mortgage’s rate and payoff date, but creates two secured obligations and a second repayment schedule to manage.
With a cash-out refinance, the new mortgage sets a new repayment schedule. If its term extends beyond the time remaining on your current mortgage, you may still be paying mortgage debt after the old loan would otherwise have been paid off. A lower scheduled payment can therefore reflect a longer period in debt rather than a cheaper way to borrow.
This distinction matters when proceeds pay for something with a shorter useful life or a shorter original repayment period. The CFPB cautions that replacing shorter-term debt, such as a car loan, with mortgage debt can keep a borrower paying for that purchase over a much longer period—potentially 10, 15, or 30 years in the example it gives. Those are examples, not standard terms or a prediction of what a particular lender will offer.
Quick wins for a faster PC:
Scan for outdated or missing drivers - takes under a minuteDriver Scan →Repair Windows errors before they cause bigger problemsFix Now →Home and financial risks
Both options put the home behind the debt
Both a home equity loan and a cash-out refinance are secured by your home. If you cannot repay, missed payments can put the home at risk of foreclosure. Taking out a loan against home equity is not equivalent to spending savings: the borrowing has a payment obligation and the home is collateral.
Rank #4
- 【Adjustable & Ergonomic】：This laptop stand can be adjusted to a comfortable height and angle according to your actual needs, letting you fix posture and reduce your neck fatigue, back pain and eye strain. Very comfortable for working in home, office and outdoor.
- 【Sturdy & Protective】 ：Made of sturdy metal, it can support up to 17.6 lbs (8kg) weight on top; With 2 rubber mats on the hook and anti-skid silicone pads on top & bottom, it can secure your laptop in place and maximum protect your device from scratches and sliding. Moreover, smooth edges will never hurt your hands.
- 【Heat Dissipation】 ：The top of the laptop stand is designed with multiple ventilation holes. The open design offers greater ventilation and more airflow to cool your laptop during operation other than it just lays flat on the table.
- 【Portable & Foldable】：The foldable design allows you to easily slip it in your backpack. Ideal for people who travel for business a lot.
- 【Broad Compatibility】：Our desktop book stand is compatible with all laptops from 10-15.6 inches, such as MacBook Air/ Pro, Google Pixelbook, Dell XPS, HP, ASUS, Lenovo ThinkPad, Acer, Chromebook and Microsoft Surface, etc.Be your ideal companion in Home, Office & Outdoor.
A second loan adds another obligation
With an equity loan, the existing mortgage remains due whether or not your financial situation changes. The additional payment can become harder to manage if income falls or expenses rise. Consider the combined obligations rather than deciding based only on whether the second loan fits this month’s budget.
A refinance can make the first mortgage more expensive or last longer
A cash-out refinance may replace a low existing rate with a higher one, increase the monthly payment, or extend the mortgage payoff period. The terms offered and your current mortgage determine whether any of those outcomes applies. Make the change explicit in the comparison rather than treating refinancing as a neutral way to access cash.
Debt consolidation changes the risk; it does not erase debt
Using home-secured borrowing to repay credit-card, auto, or other non-mortgage debt shifts that debt onto a loan secured by the home. The balance still has to be repaid, and failure to make payments has different consequences when the home is collateral. The CFPB’s 2025 report introduction says that using home equity to pay higher-interest debt can make sense only if the cost of extracting the equity is lower; it also warns about foreclosure exposure and the loss of wealth tied up in the home. A lower rate alone does not remove those risks.
Recommended Free Tools
Before consolidating, compare the extraction costs—including interest and fees—with the cost of continuing to repay the existing debt. Consider whether the new payment schedule could keep the balance outstanding longer, and whether paying off revolving debt would be followed by new borrowing. The second question matters to your finances, but neither loan turns an underlying spending or repayment problem into debt elimination.
Best Value
- Twin-Ball Design : Hiacry gel pen features a double ball conical tip that reduces writing resistance and provides a stable and smooth writing experience. 0.7mm quick drying black ink ensures no jumping, leakage or seepage.
- Quick-Dry Long Lasting Ink：0.7mm black ink can slide effortlessly, dry immediately, & is not easily dirty. It has a high-capacity reservoir (up to 1300 meters), which is very suitable for left-handed & right-handed users.
- Sleek Design for Journaling & Planning: Engineered with a low center of gravity and precision tip for steady ink flow, these journaling pens excel at note-taking, sketching, planning, and more. They combine stylish pens with top-tier performance.
- Rolling Ball Design：The pocket clip with roll ball design can be easily attached to notebook pockets and binders, in addition, the fidget on the pen clip is also a small toy for your daily thinking to relieve stress.
- Comfortable Non-Slip Grip：The ergonomic pen barrel has a soft rubberized coating for a comfortable, non-slip grip, so you won't get fatigued even after long hours of writing.
Tax treatment depends on what you do with the money
For tax years beginning after 2017, the IRS says interest on qualifying home equity debt secured by a main or second home may be deductible, subject to applicable limits, when the proceeds are used to buy, build, or substantially improve the residence securing the debt. Interest on proceeds used for personal expenses such as paying credit-card debt does not qualify under that rule.
The use of the borrowed money matters; the fact that the debt is secured by a home does not make interest automatically deductible. IRS Publication 936 also explains that home mortgage interest is deductible only to the extent proceeds were used to buy, build, or substantially improve the home securing the loan, subject to applicable rules. That means a cash-out refinance should not be assumed to qualify simply because it is a mortgage or because the original mortgage had deductible interest.
Tax treatment can depend on how proceeds are used, applicable limits, and the tax year. Check the current IRS home-mortgage-interest guidance and Publication 936 for the year you are filing, or consult a qualified tax professional about your circumstances. The tax outcome should be evaluated separately from the loan’s rate, fees, and repayment cost.
What’s actually slowing this PC down?
Pick the symptom - the matching free tool is one click away.
Questions to answer before choosing
- How favorable is my current mortgage rate compared with the refinance offer, and how much time remains on my current loan?
- What amount of cash do I actually need, and what are the full fees and loan terms for that amount under each option?
- Can I afford the combined first- and second-loan payments, or the new refinance payment, under a less favorable household budget?
- How long do I expect to keep the debt, and what balance and total cost will remain at that point?
- Am I willing to secure this borrowing with my home, especially if it is being used to replace debt that was not secured by the home?
- What is the use of proceeds, and does it matter to the tax treatment under current IRS rules?
What national home-equity figures do—and do not—tell you
A CFPB report published in 2025 says that two-thirds of U.S. households owned a home in 2022 and that median home-equity value was over $200,000. Those are national statistics about household ownership and equity in 2022, not a current estimate of your home’s value or a promise of how much a lender will let you borrow. They do not establish your eligibility, available loan amount, rate, fees, or ability to make payments.
