Cash from equity without giving up a good first mortgage: second lien or cash-out refinance
Keep or replace the first lien
The short version
Keeping the first lien tends to win when its rate is well below today's quotes and the cash you need is small compared with the balance. Replacing it can win when the first mortgage rate is close to current quotes, when you want one payment, or when the new money is large relative to the balance. The blended rate settles the question for your numbers.
Last reviewed against the primary sources listed below.
Three questions
- How does my first mortgage rate compare with today's cash-out quote?
- How much cash do I need compared with my balance?
- Do I want a fixed amount, or a line to draw over time?
Lien questions
Is a HELOC better than a cash-out refinance?
It depends on your first mortgage rate, the amount you need and the costs. Compare the blended cost of both.