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What is better for the long term, cash-out refinance or HELOC?

by KThompson from Douglasville, Georgia. Mar 15th 2013 Reply


William J Acres (William_Acres)
#1 ranked lender in Arizona - 8,659 contributions

Only you can say.. With a HELOC, you apply one time, and you have unlimited access to the equity without having to re apply each time.. The closing costs associated with a HELOC are minimal.. Usually around $500 or less.. With a cash out, you apply once, get the cash, and you have a new mortgage... because it's a new mortgage, you pay full refi closing costs, which typically run around $3000.. If you need to tap into your equity again, you have to re apply, pay more costs all over again... As Loan Officer, we get paid on the TOTAL loan amount.. If you do a cash out refi.. I get paid much more, then if you just do a HELOC... I'm not pointing fingers here, but sometimes the compensation is what drives the advice you get from a LO... The real question is how much of your equity do you need, when do you need it, and what will you use it for??? So, only you can say what's best for your scenario.. I'm a Broker here in Scottsdale AZ and I only lend in Arizona. If you or someone you know is looking for financing options, feel free to contact me or pass along my information. 480-287-5714

Mar 15th 2013
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Joe Shamie (Joe Shamie)
#4 ranked lender in New Jersey - 1,412 contributions

Cash out refinance. If you take a HELOC, you will NOT be getting a fixed rate. Since you indicated a long term time horizon, you DONT want to be in a loan that will expose you to interest rate risk in hte future. The cash out refinance will allow you to select a fixed rate product and eliminate your interest rate risk.

Mar 15th 2013
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Dave Metsker (DaveMetsker)
#37 ranked lender in Oregon - 2,317 contributions

It all depends on what you use the cash for, and your exit strategy. One caution, some HELOCs are subject to freezing or cancelation.

Mar 15th 2013
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Abdi Mohammadian (mohammadian)
#867 ranked lender in California - 33 contributions

The real problem on a cash out is you would be exceeding 75% LTV and on a loan over $417 K is challenging.HELOCs are available up to 80% LTV. I think it deponds on your situation.

Mar 15th 2013
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Peter Savino (855411LEND)
#100 ranked lender in New Jersey - 332 contributions

With out knowing all the information, that is very hard question to answer correctly. What your doing with the funds will help us to answer. Are you paying off debt ? paying for collage, repairs to home ? As others have said, What is the current loan to value ratio ? and how much are you looking for ? What is current rate and term ?

Mar 15th 2013
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Simon Nwoke (SimonNwoke)
#71 ranked lender in Georgia - 37 contributions

From a cost point of view, Heloc closing cost is cheaper in the short term. In the long term, it is more expensive than a regular cash out refinance. Heloc is just like a credit card unless you pay it off in full.In the long term, I will recommend cash out Refinance because it is a regular mortgage and you will have a fixed amortized payment. Again it depends on your objective.Call me and I can help either way.Thanks 478-330-6382

Mar 15th 2013
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Michelle Curtis Loan Originator NMLS 401173 (EmbassyFundingLLC)
#77 ranked lender in Florida - 2,240 contributions

That is a difficult question without knowing what your current situation is and your goals.

Mar 15th 2013
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Jason Robinson (CFIsupport)
#58 ranked lender in Georgia - 106 contributions

Fixed Rate mortgages are best over the long term, simply because the market is it's lowest right now. There are times that Helocs may be better suited, but without the details I will say go Fixed.

Mar 16th 2013
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Scott Drilling (SDrilling)
#80 ranked lender in Georgia - 201 contributions

Cash-out refinance is much better. You will get a fixed rate & payment vs. prime + .25-1.00. The heloc would be great in the fact that you can pay the balance down and use the line again and again as needed. Feel free to email me directly if you should have any follow up questions.sdrilling@myeaglelending.com

Aug 29th 2014
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Scott Drilling (SDrilling)
#80 ranked lender in Georgia - 201 contributions

Cash out is better as you get a fixed rate vs prime + .25-1.00. The heloc would be great if you want to use it like a credit card. Please email me with any follow up questions. sdrilling@myeaglelending.com

Aug 29th 2014
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