Two ways to turn equity into cash. One keeps the mortgage you already have; the other replaces it. The cheaper monthly payment and the cheaper total interest are frequently not the same option.
The HELOC is modeled as interest-only on the full draw, then fully amortized over the repayment period — with no further draws after year one. A cash-out refi replaces your mortgage entirely, so its clock restarts at the new term.
A cash-out refi replaces your entire mortgage with a new, larger loan. A HELOC is a separate line of credit on top of your existing mortgage.
It depends on your current mortgage rate versus current HELOC and refi rates, how much you’re borrowing, and how long you plan to carry the balance.
Closing costs are entered on the cash-out refi side only, and they’re rolled into the new loan balance. The HELOC side has no fee input — if your lender charges origination or annual fees on the line, factor those in yourself when comparing.