Should I use a home equity line or a cash out refinance?

How they differ

A line of credit sits behind your first mortgage. You draw what you need, pay interest only on the balance drawn, and the rate is typically variable. Closing costs are usually modest.

A cash out refinance replaces the first mortgage entirely at today's rate, with full closing costs and a fixed payment on the whole balance.

The deciding question

Look at your existing rate. If it is well below today's market, replacing it to access equity is an expensive way to borrow, and a line usually wins.

If your current rate is at or above market, or you want payment certainty on a large sum, the refinance can be the cleaner structure.

A caution worth stating

Both are secured by your home. A variable line that is comfortable today can be uncomfortable after several rate increases. Borrow an amount you could still service at a materially higher rate.