At-a-Glance: Cash-Out Refi vs. HELOC
When a Cash-Out Refinance Wins
A Cash-Out Refinance is often the best choice for 2026 homeowners who want to consolidate high-interest debt or fund a major, one-time home renovation. Because it replaces your first mortgage, you get the benefit of a single, fixed monthly payment.
- Debt Consolidation: If you are carrying $50,000+ in credit card debt at 20%+, rolling that into a 6% mortgage provides massive monthly relief.
- Predictability: Your rate is locked for 30 years, protecting you from future market volatility.
- High Loan Amounts: With 2026 limits at $832,750, you can access larger sums than a typical HELOC might allow.
When a HELOC is the Smarter Move
The HELOC is often referred to as a “safety net.” It is ideal if you already have a very low interest rate (e.g., 3% or 4%) on your primary mortgage that you don’t want to give up.
- Keep Your Low Rate: You only pay the higher 2026 rates on the money you actually draw from the line of credit, leaving your primary mortgage untouched.
- Flexibility: Perfect for phased home projects where you don’t know the final cost upfront.
- Interest-Only Options: Many HELOCs allow for interest-only payments during the 10-year “draw period,” keeping initial costs low.
2026 Decision Matrix
Go Cash-Out Refi if…
Your current rate is 6.5% or higher, you need a fixed payment, and you are funding a large, single expense.
Go HELOC if…
Your current rate is below 5%, you want a “just in case” emergency fund, or your project is happening in stages.