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A home-equity loan, home-equity line of credit and cash-out refinance can all provide access to qualifying equity, but they work differently and carry different costs and risks.
A cash-out refinance replaces the existing first mortgage. A home-equity loan or HELOC is generally an additional lien while the current first mortgage remains in place.
Home-equity loans commonly use fixed payments, while HELOCs often have variable rates and separate draw and repayment periods. Program structures vary.
Failure to repay can put the property at risk. Compare payment changes, fees, total borrowing cost and the purpose of the funds before proceeding.
General information is useful. A mortgage professional can help you evaluate the facts that apply to you.
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