Cash-Out Refi vs HELOC vs Personal Loan
Cheapest way to borrow $50,000
What's the cash for?
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Cheapest option
Personal loan
$2,763/mo · total cost $15,978 · saves $36,029 vs HELOC / HELOAN
Cheapest option
Personal loan
$15,978 total cost
Cash needed
$50,000
amount to borrow
Current home value
$600,000
50.0% LTV before borrowing
Combined LTV after
58.3%
with HELOC
All three options
Personal loanCHEAPEST
Rate: 11.50%Term: 5yr Total monthly: $2,763Lifetime cost: $15,978
- •Unsecured, no lien on your home
- •Higher rate but no closing costs
- •Shorter term means higher monthly payment but less total interest if paid off fast
- •Not tax-deductible
HELOC / HELOAN
Rate: 8.50%Term: 20yr Total monthly: $2,021Lifetime cost: $52,006tax-deductible
- •Keep your existing 4.25% mortgage untouched
- •Modeled as 10yr interest-only draw at $358/mo, then 10yr amortizing at ~$626/mo (payment shock at conversion)
- •HELOC rates are usually variable (Prime + margin), so the payment can rise on top of the draw-to-repay shock
- •✓ Interest tax-deductible if used for home improvement
- •Combined LTV: 58.3%
Cash-out refinance
Rate: 6.75%Term: 30yr Total monthly: $2,312Lifetime cost: $234,191tax-deductible
- •Replaces your 4.25% mortgage with 6.75%
- •$66,748 of lifetime interest is on the cash-out slice; it stays deductible because the cash goes into the home. Interest on the refinanced existing balance remains deductible either way.
- •⚠ Your current rate is better. Refinancing means paying 2.50% more on the entire balance, not just the cash-out portion.
- •New loan: $356,500 (59.4% LTV)
Tax-deductibility: Since the 2017 TCJA (made permanent in 2025), interest on new home-secured borrowing (cash-out and HELOCs) is only deductible when proceeds are used to buy, build, or substantially improve the home securing the loan; interest on the existing balance you refinance stays deductible, and financed closing costs don’t count as acquisition debt. Each option is credited (or debited) for the change in deductible interest versus keeping your current mortgage. Personal loan interest is never deductible. The tax savings shown above assume you itemize, stay under the $750k acquisition-debt limit, and get the full marginal benefit on every dollar of qualifying interest. If your other itemized deductions don’t already exceed the standard deduction, real savings will be lower (potentially zero). Use the Refinance calculator’s Advanced tax settings for a more rigorous treatment. Watch for the rate-trap: if your existing mortgage rate is below the refi rate, cash-out refi means re-pricing your entire balance, almost always worse than a HELOC, even at a higher HELOC rate.