A home equity loan is a fixed-rate lump sum second mortgage. A HELOC is a variable revolving line. A cash-out refinance replaces your first mortgage. Want predictability and to keep a low first rate? Home equity loan.
How they differ
The home equity loan and HELOC are both second liens that preserve your first mortgage; the difference is fixed lump sum vs variable revolving. A cash-out refinance replaces the whole first mortgage — better only if today’s rate helps you.
Choosing
Choose a home equity loan for a fixed amount and payment; a HELOC for flexible access; a cash-out refinance to consolidate into one loan at a favorable rate.
| Factor | Home Equity Loan / HELOC / Cash-Out |
|---|---|
| Payout | Lump sum / Revolving / Lump sum |
| Rate | Fixed / Variable / Fixed or ARM |
| Keeps 1st mortgage | Yes / Yes / No |
| Best for | Fixed one-time need / Flexible access / One consolidated loan |
Frequently asked questions
Which has the most predictable payment?
The home equity loan — fixed rate and fixed payment for the full term.
Which keeps my low first-mortgage rate?
A home equity loan or HELOC; both are second liens that leave your first mortgage in place.
When is cash-out better?
When today’s rate is at or below your current one, so consolidating into a single new mortgage makes sense.
Save Financial is a California-licensed mortgage brokerage (NMLS #377740, DRE #01875766). Figures are illustrative for 2026 and not an offer of credit.