If you’re a homeowner, you’ve probably heard about options like Cash Out Refinance and Home Equity Loans. Both let you tap into the value of your home, but they work differently—and choosing the right one depends on your goals.
Let’s break it down together.
What Is Home Equity?
Home equity is the difference between what your home is worth and what you still owe on your mortgage.
👉 For example: If your home is valued at $250,000 and you still owe $150,000, then you have $100,000 in equity.
That equity can become a powerful financial tool—especially when you need cash for renovations, tuition, or consolidating debt.
How Do I Calculate My Home Equity?
It’s easy!
Just subtract your current mortgage balance from your home’s estimated market value.
📌 Formula:
Home Value – Mortgage Balance = Home Equity
Quick tip: When using a Cash Out Refinance, keep in mind that lenders usually require you to retain a portion of your equity—so you won’t be able to take 100% of it out in cash.
So… What’s the Difference?
Here’s a quick side-by-side look:
| Feature | Cash Out Refinance | Home Equity Loan |
| What Happens? | Replaces your current mortgage with a new, larger one | Adds a second loan on top of your current mortgage |
| Interest Rate | Usually lower | Usually slightly higher |
| Monthly Payments | One new payment | Two separate payments |
| Loan Term | Up to 30 years | 10, 15, or 20 years |
| Best For | Getting better mortgage terms + cash | Keeping your current mortgage as-is |
Real-Life Examples
- Cash Out Refinance: Mia’s current mortgage rate is high, and she wants to make home upgrades and consolidate debt. She refinances into a lower rate and pulls cash from her equity—all with one new monthly payment.
- Home Equity Loan: James has a great mortgage rate and doesn’t want to touch it. He uses a Home Equity Loan to fund a kitchen remodel while keeping his original mortgage intact.
Which Option Is Right for You?
Ask yourself:
- Do I want to keep my current mortgage and just access extra cash? → Go with a Home Equity Loan
- Do I want to refinance and possibly lower my rate while taking cash out? → Cash Out Refinance might be the better choice
Whatever you choose, our team at Green Arrow Mortgage is here to help you weigh your options and guide you through a smooth process—without the stress or pressure.
📞 Call us at +1 832-821-4441
💬 Chat with us on WhatsApp at greenarrowmortgage.com
📱 Follow us on Instagram @green.arrowmortgage for tips and updates.
