1. Interest rates are usually lower for cash-out refinancing versus HELOCs which have adjustable interest rates tied to prime or LIBOR.
2. Closing costs are higher for a cash-out refinance, around 2-6% of the loan amount, while a HELOC has minimal or no upfront fees.
3. A cash-out refinance converts home equity into a lump sum payment, while a HELOC allows accessing smaller amounts of equity over time.
4. Cash-out refinancing does not provide tax benefits, but HELOC interest is often tax deductible as it is considered debt, not mortgage interest.
5. Cash-out refinancing has a fixed monthly payment while a HELOC offers flexible repayment structures with interest-only payments.
6. A cash-out refinance takes 45-60 days to close but provides funds upfront, while a HELOC opens faster but takes longer to access large approved limits.
7. A cash-out refinance is better for large, one-time expenses needing upfront funds, while a HELOC is preferable for ongoing borrowing needs.
8. Closing a cash-out refinance temporarily lowers your credit score, while HELOC inquiries only minimally impact it.
9. If you want to take advantage of low mortgage rates, a cash-out refinance allows refinancing your current home loan.
10. Consult a financial advisor to determine if a HELOC or cash-out refinance makes more sense based on your specific financial situation and needs.