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Lower your rate, change your term, or tap your equity
Refinancing replaces your current mortgage with a new one — to change rate or term, or to convert equity into cash. A lower note rate can still lose after costs if you move or refinance again first. Run break-even before you treat a headline rate as savings.
| Question | Modest costs | Costs include a point | Thin monthly savings |
|---|---|---|---|
| Illustrated cash costs | $3,000 | $6,000 | $4,000 |
| Illustrated monthly P&I savings | $200 | $150 | $50 |
| Break-even months | 15 months | 40 months | 80 months |
| If you move or refinance again in 24 months | About 15 months. In this illustration, a 24-month stay earns the costs back. | About 40 months. In this illustration, a 24-month stay does not earn the costs back. | About 80 months. In this illustration, a 24-month stay does not earn the costs back. |
Break-even months ≈ cash costs ÷ monthly principal-and-interest savings. Cash costs include appraisal, title, recording, prepaid interest, origination, and discount points, minus lender credits. Use old P&I minus new P&I. Do not treat a tax, insurance, or HOA change as “savings.” Dollar figures on education pages are worked examples for illustration. They are not your payment, cash to close, or an offer of credit.
Get a clear, no-pressure look at your options with an Ondo advisor.
Speak with an advisorBoth tap equity. They do not have the same payment, lien position, or tax questions. This is education, not a recommendation to take cash out.
| Question | Cash-out refinance | HELOC |
|---|---|---|
| Payment shape | One new first-lien payment replaces the old mortgage. Closing costs are usually financed or paid at closing. | The first mortgage stays. The line is a second payment (often interest-only in the draw period, then amortizing). |
| Lien position | Single first lien after closing. The old loan is paid off. | Second lien behind the existing first. Default risk and pricing follow that structure. |
| Rate structure | Usually a new fixed or ARM first mortgage. You re-spread closing costs over the new term. | Many HELOCs are variable after a draw period. Payment can rise without a refinance. |
| Tax questions (not tax advice) | Interest deductibility and whether cash-out is used for home improvement vs other purposes is a CPA question. This table is not tax advice. | HELOC interest deductibility also depends on use of funds and current tax law. Ask a tax professional. This is not tax advice. |
| When people compare it | You also want a new first-lien rate or term, or you need a lump sum large enough that a second lien would be awkward. | Your first-lien rate is worth keeping, the need is staged (draws over time), or you want to avoid resetting a 30-year clock. |
| Closing friction | Full mortgage close: appraisal, title, disclosures, three-day TRID wait on most files. | Usually lighter than a first-lien refinance, still an appraisal/valuation and title work. Not “no closing.” |
Program rules, fees, and county loan limits change. Confirm the current published schedule and lender overlays. Nothing here is a quote, a lock, or a credit decision.
Education first. A conversation with a loan officer is how you find out what may actually fit your file.
Loan information is provided by Ondo Real Estate (NMLS ID on file). This is not a commitment to lend, a loan approval, or an offer of credit. Rates, terms, and payments shown are estimates for illustration only, are not a quote, and are subject to credit approval, underwriting, and market conditions. You are not required to use Ondo for financing to buy or sell with Ondo. Equal Housing Lender. Program rules, fees, and county loan limits change. Confirm the current published schedule and lender overlays. Nothing here is a quote, a lock, or a credit decision. Licensing and disclosures