What's the Difference Between a HELOC and a Cash-Out Refinance?
If you're a homeowner, you may be wondering if you should get a HELOC, cash-out refinance or reverse mortgage. Here's a quick rundown of each option and what you need to know.
A home equity line of credit, or HELOC, gives you the flexibility to borrow against your home's value over time. You can use the funds for home improvements, debt consolidation or other purposes.
A cash-out refinance allows you to tap into your home's equity to get cash in hand. You can use the funds for anything you want, but you'll have to pay off the loan with interest.
A reverse mortgage is a special type of loan that allows you to tap into your home's equity without having to make monthly payments. The funds can be used for anything, but they must be used to pay off your existing mortgage first.
Each option has its own pros and cons, so it's important to evaluate your needs and choose the best option for you.