What is a HELOC and a cash-out refinance?

A HELOC is a second mortgage, which you’ll repay on top of your existing home loan. A cash-out refinance replaces your current mortgage with a new one — complete with its own term, interest rate and a single monthly payment. If you're thinking about tapping into your home equity, here's what you should know. What is a cash-out refinance?

Can I refinance my HELOC?

You can refinance your HELOC into a new line of credit, a fixed-rate home equity loan, a mortgage or a fixed-rate HELOC. You should have seen it coming, but you didn’t. You took out a home equity line of credit (HELOC) a few years ago, and have just been repaying the interest on your withdrawals.

What is a HELOC loan & how does it work?

HELOC is an acronym that stands for home equity line of credit. It’s a form of second mortgage, meaning you’ve put your home up as security for the loan. And you could face foreclosure if you default. There are many types of HELOCs with varying loan terms — 15 years is a popular one. The loan will have a draw period, followed by a repayment period.