Deciding Between Cash-Out Refinance vs. 401K Loans vs. HELOCs

Getting a Cash-Out Refinance vs. a 401k Loan vs. a HELOC: What to Consider

If you're looking to access the equity in your home, you may be wondering what route to take. Should you get a cash-out refinance, a 401k loan, or a home equity line of credit (HELOC)? Here are some things to consider to help you decide which option is right for you.

Cash-Out Refinance

With a cash-out refinance, you take out a new loan (usually at a lower interest rate) to pay off your existing mortgage and receive cash back. The amount of cash you receive depends on the equity you have in your home. Keep in mind that this option will extend the length of your loan and likely increase your monthly payment.

401k Loan

You can borrow up to $50,000 or half the value of your 401k account (whichever is less) with a 401k loan. The interest you pay on the loan goes back into your account, and there's no credit check required. However, if you leave your job (whether voluntarily or not), you typically have to repay the loan within 60 days or it will be considered a withdrawal and subject to taxes and penalties.


A HELOC is a revolving line of credit that uses your home's equity as collateral. You can typically borrow up to 85% of the equity you have in your home. The interest rate on a HELOC is variable and will fluctuate with the market. Keep in mind that if you don't make payments and the value of your home decreases, you could end up owing more than what your home is worth.

So, which option is right for you? It depends on your individual circumstances. Consider factors such as how much money you need, how quickly you need it, the interest rate you're willing to pay, and the terms of the loan. Weigh your options and choose the one that makes the most sense for you.

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