The three doors, one paragraph each
Cash-out refinance replaces the mortgage with a bigger one — single payment, fixed rate, big closing costs (2–6%), and the whole balance moves to today's rate. Price it with the cost-per-dollar calculator, which also checks the typical 80% LTV cap.
HELOC is a variable-rate credit line in second position: draw what you need when you need it, pay interest only on the drawn amount, minimal closing costs. The flexibility is real; so is the variable rate and the discipline it assumes — a HELOC is a tool for staged spending (renovation phases, tuition years), not a slush fund.
Home-equity loan is the fixed-rate second lien: one lump sum, fixed payment, fixed term. Rates run above first mortgages but the structure is predictable — effectively a personal loan secured by the house, at a much better rate than unsecured.
Match the door to the job
- Staged renovation: HELOC (draw as phases bill).
- One-time known amount (roof, consolidation with fixed scope): home-equity loan — fixed cost, no temptation tail.
- High current mortgage rate + cash need: cash-out refi — the refinance carries the day and the cash is cheap freight (break-even math).
- Debt consolidation: any door beats 24% cards on paper — but you're securing old spending with your house. Read when consolidation helps first, and only proceed with spending fixed.
The risk nobody prices
All three doors convert flexible trouble into foreclosure-grade trouble. Unsecured debt gone bad bruises your credit; equity debt gone bad takes the house. That asymmetry is worth a rate premium in many real lives — sometimes the honest answer is a smaller unsecured loan (price one) or no borrowing at all. Equity feels like found money; it's your future housing security wearing a costume.