Which is better for you? Cash out refi vs home equity loan

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Which is better for you? Cash out refi vs home equity loan. Should you refinance your mortgage… or just get a home equity loan? This is a big question. And choosing the wrong path could cost you hundreds of thousands of dollars over time. Let’s break this down, compare the two options, and run through an example to show which one puts more money back into your life.

The Truth: Most People Default to a Cash Out Refi

Why? Because that’s what’s being advertised everywhere. It’s what the talking heads and big banks want you to do.

But here’s the truth:
A cash out refinance isn’t always the smartest move.
In fact, for most people right now, a home equity loan is a much better choice.

Why a Home Equity Loan Usually Wins

Especially if you bought or refinanced from 2020 to 2023, you probably locked in a great rate. So why would you give that up?

Instead of replacing your entire mortgage at a higher interest rate, you can leave it alone and just borrow what you need using a home equity loan.

Let’s look at what makes home equity loans so powerful:

✅ Fixed rate and fixed payments

Just like a mortgage or car loan — predictable and simple.

✅ Lower total cost over time

Because you’re only borrowing a small amount, the interest paid is much less.

✅ Faster payoff

Many home equity loans are 5–10 years. That means you’re not stretching out interest for 30 years.

✅ Keep your low original rate

Your current mortgage doesn’t change. That keeps your monthly payments lower overall.

Real-Life Example: $50K Mistake or $310K Mistake?

Let’s say you currently owe $300,000 on your mortgage at a low 3% rate. That gives you a monthly payment of about $1,265 over 30 years.

Now, imagine you need $50,000 for home repairs or to pay off high-interest debt. Here’s what happens with each option:

🚫Cash Out Refi

  • New loan: $350,000

  • New rate: 7%

  • New monthly payment: $2,328

  • Over 30 years: You pay $838,000 total

✅ Home Equity Loan

  • Keep your original $300,000 loan at 3%

  • Monthly payment: $1,265

  • Borrow $50,000 at 8% over 10 years

  • Monthly payment: $606

  • Total paid on both loans: $528,000

The Difference?

You’d spend $310,000 MORE by choosing the cash out refi.

Let that sink in: That’s $310,000 for the same $50,000 you needed.

And that’s not including the higher closing costs that come with a refinance — usually 10x to 20x higher than a home equity loan.

When a Cash Out Refi Might Make Sense

Yes, there are rare cases where a refinance works better. For example:

  • If your current mortgage is very small

  • If you need a very large amount of money

  • If your new rate is close to your old one

But those situations are rare — probably 95% of the time, a home equity loan is the better choice.

Use Our Free Calculator to Run Your Numbers

We made it simple for you. Use the calculator below to plug in your info:

  • What’s your current mortgage?

  • What rate do you have?

  • How much money do you need?

Take 5 to 10 minutes to do the math. You’ll likely be shocked at the difference.

Cash out refi vs home equity loan

The decision you make today could impact your family for decades.

Ask yourself:
How many hours would you have to work to make up $310,000?
How many extra years until you can retire?

Choosing the right loan means more freedom, more savings, and more peace of mind — now and in the future.

Final Thoughts

Don’t follow the crowd. Don’t fall for what’s “popular.”
Run your numbers. Use your brain. Protect your money.

Because when you do, you’ll find the best path for you.

👉 Use the calculator. See the difference. Put more money in your life — not the bank’s. 

Watch our most recent video to find out more about: Cash Out Refi vs Home Equity Loan: Which is better for you?

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From Debt Stress to Financial Peace: Start Taking Control Today

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Today we are going to discuss how you can move from debt stress to financial peace! Debt doesn’t just cost you money, it also steals your peace. If you feel like you’re always behind, dragging debt around like a heavy load, you’re not alone. However, here’s the good news: you can fix it, and you don’t need a fancy budget or a financial degree to get started.

Let’s walk through how to spot the drag, lower your costs, as well as start moving forward, faster.

What’s Dragging You Down?

Are you battling friction in your finances?

Here’s what that might look like:

  • Paying 24% or more on credit cards while someone else is paying 0%

  • Getting denied for better rates because your credit score is too low

  • Using the wrong kind of loan for the type of debt you have

  • Refinancing the wrong way, adding bad debt to your home loan

All of these things slow you down. You’re doing the same work as your neighbor, but it feels like you’re pulling a parachute while they’re gliding.

Why You’re Paying Too Much

Let’s break down four common mistakes:

First, Carrying High-Interest Credit Card Debt

Many people carry balances at 24% or even 30% interest. But your neighbor might be using a 0% credit card for 18 months or more. That’s money in their pocket, not the bank’s.

Second, A Low Credit Score

A 620 score might get you denied. A 740 score could unlock better terms. Same income. Same effort. But very different results.

Third, Ignoring Home Equity

Instead of paying 24% interest, you could use a home equity loan at 6%. That alone could save hundreds a month.

Finally, Refinancing Instead of Restructuring

Too many people do a full refinance and roll credit card debt into their mortgage. Instead, a simple home equity loan or HELOC could save thousands—without resetting the clock on your mortgage.

Real Example: You vs. Your Neighbor

Let’s say you both have $20,000 in credit card debt.

  • You are paying 24% interest. That’s about $400/month in interest alone.

  • Your neighbor uses a 6% home equity loan. That’s only $100/month.

That’s a $300 monthly difference or $3,600 a year. Imagine putting that into:

  • Family trips

  • Groceries

  • Date nights

  • Paying off debt faster

Your neighbor isn’t richer, they’re just dragging less. That’s the power of moving From Debt Stress to Financial Peace: Start Taking Control Today.

How to Reduce the Drag

You can make progress in just three simple steps:

Step 1: Know Your Interest Rates

Make a list of your credit cards, loans, and debts. Find out what interest rates you’re paying.

Step 2: Find a Better Option

Look into:

  • 0% balance transfer cards

  • Home equity loans or HELOCs

  • Low-interest personal loans

  • Credit from family or friends

The goal? Pay less in interest and keep more of your money.

Step 3: Fix Your Credit

To get better terms, raise your credit score. You can:

  • Pay down balances before the due date

  • Dispute old or incorrect items

  • Ask a family member to add you as an authorized user on a credit card

Even small changes can bring big results.

From Debt Stress to Financial Peace: Start Taking Control Today

Debt is part of life, but how you carry it makes all the difference. By switching from high-cost to low-cost debt, you get more freedom, more fun, and more money to enjoy.

No more giving your extra cash to banks.
No more feeling stuck.
Just smart choices and better credit.

Remember, the tools are out there, Smart with Debt has free calculators as well as resources to help. You don’t need to change everything overnight. Just start small, and start now.

Because it’s time to go From Debt Stress to Financial Peace: Start Taking Control Today.

Watch our most recent video to find out more! https://youtu.be/zJzTnnfgPgw 

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Is a HELOC More Dangerous Than a Credit Card?

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When it comes to borrowing money, many people wonder:
Is a HELOC more dangerous than a credit card?

The answer?
Yes… and no.

Let’s break it down using real examples so you can decide what’s right for your situation.

How HELOCs Are Less Risky Than Credit Cards

Let’s start with interest. That’s the big one.

  • Most credit cards charge around 24% interest.

  • A HELOC (Home Equity Line of Credit) is closer to 8%.

So, if you owe $10,000…

  • A credit card might cost you $2,400/year in interest.

  • A HELOC? Just $800/year.

That’s a difference of $1,600 — and that money stays in your pocket instead of going to the banks.

That’s a huge win for your budget.

Lower monthly payments mean less stress and fewer risks of falling behind. You’re also not paying extra just to carry the debt.

How HELOCs Are More Risky Than Credit Cards

Now let’s talk about the risk.

A HELOC is a mortgage. That means it’s tied to your house. If something goes wrong and you miss payments:

  • It affects your credit more than a credit card would.

  • You could even face foreclosure.

That’s a big deal.

You’re giving up equity in your home and putting your property on the line. This is why you should only use a HELOC if you know where your repayment will come from.

If lowering your interest helps you get ahead, great.
But if you’re falling behind already, a HELOC might only delay the problem.

What About a Refinance Instead?

If you’re thinking about using your home to consolidate debt, a HELOC is usually a smarter option than a full refinance.

Here’s why:

  • Refinances roll your entire mortgage into the new loan.

  • If your current mortgage is at 3%, why bump the whole thing to 6% or 7%?

  • A HELOC lets you borrow just what you need, at a lower cost (sometimes as little as $500 vs. $5,000+ for a refinance).

Plus, most HELOCs let you borrow up to 80–85% of your home’s value.

So, Is a HELOC More Dangerous?

Only if you’re not careful.

✅ If you need to lower your payments and have a plan:
A HELOC can save you thousands and reduce financial stress.

⚠️ But if you’re struggling to make payments already:
Tying that debt to your house could make things worse.

Download Free Tools

Want to see the real numbers for yourself?

📥 Download our free tools at Smart with Debt:

  • Credit Cards vs HELOCs

  • Refinance vs HELOCs

These side-by-side comparisons show how much you could save — or risk — based on your situation.

Make your debt work for you, not against you. Contact us today to find out more.
That’s what being Smart with Debt is all about.

Watch our most recent video: “Is a HELOC More Dangerous Than a Credit Card?”

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What Is a Fixed Rate?

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Today we are going to answer the question, “what is a fixed rate?” A fixed rate is a steady, unchanging interest rate on a loan. No surprises. No sudden jumps. You lock in one rate, and it stays the same for the life of the loan.

Think of it like locking in the price of your favorite coffee. If you could pay the same $3 per cup for 30 years, no matter how much prices rise, that can make a big difference in the long run.

For example, if you get a fixed-rate mortgage at 6%, your monthly payment stays the same, even if market rates go up to 8% or drop to 4%. That means predictability in your budget.

The opposite is a variable rate, which can change over time. That might start lower, but it can go up, sometimes way up.

This option is great when interest rates are low or when you want stable, predictable payments. It keeps your budget in check and helps avoid surprises.

Contact Us Today! 

Which loan is best for you? Contact us today to find out more about: “What is a fixed rate? 

Free Tools For You! 

We also have free tools available! Accelerate Debt Payments Calculator to see which debt option is best for you! 

Learn more!

Visit our YouTube channel to learn more about using debt instead of letting debt use you!

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Debt Consolidation EXPOSED: Do It the Right Way!

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Today we are going to discuss debt consolidation exposed: Do it the right way! The numbers don’t lie. We’re going to show you how to pay less instead of falling into a massive debt trap. If you’ve been told that consolidating debt with a new mortgage is the best move, think again.

What’s the Goal of Debt Consolidation?

For most people, lowering their monthly payments is the top priority. However, here’s the problem. Most lenders and TV personalities only focus on monthly payments instead of total debt costs.

At Smart With Debt, we love debt, when it’s used the right way. We believe in good, healthy debt that keeps more money in your pocket, not the lender’s.

So, let’s break down the numbers as well as expose the real cost of debt consolidation.

The $200,000 Debt Mistake

Let’s look at an example of a homeowner trying to consolidate debt:

  • Original Mortgage: $300,000 at 4% interest (from four years ago).
  • Current Mortgage Balance: $277,000 with 312 payments left (26 years).
  • Credit Card Debt: $30,000 across three cards at 21-24% interest.
  • Total Monthly Payments: $2,432 (Mortgage: $1,400 + Credit Cards: $1,000).

The goal? Lower the payments. But watch how lenders trick you into paying far more in the long run.

Refinancing at 7%: A Costly Move

If you refinance your $277,000 mortgage today at 7% interest, your new mortgage payment would be:

  • New Mortgage Payment: $1,800 per month.
  • New Loan Term: 30 years (360 payments).
  • Total Interest Paid Over Time: $664,000!

That’s over $200,000 MORE than your current loan!

Now, what if you refinance both your mortgage and your $30,000 credit card debt into one new loan?

  • New Loan Amount: $312,000 at 7%
  • New Payment: $2,075 per month (Yes, slightly lower)
  • Total Debt Paid Over Time: $747,000!

You just turned a $30,000 problem into a $747,000 mistake!

This is what lenders aren’t telling you.

The Right Way to Consolidate Debt

fInstead of rolling everything into a new mortgage at a higher rate, try this instead:

First, Keep Your Mortgage Intact.

  • You already have a low rate (4%)—don’t touch it!

Second, Use a Home Equity Loan Instead.

  • A fixed-rate home equity loan at 8% costs much less over time than refinancing your whole mortgage.
  • Loan Amount: $31,000 (credit card debt + closing costs).
  • New Payment: $376 per month (over 10 years).

Third, New Total Monthly Payment:

  • Mortgage ($1,400) + Home Equity Loan ($376) = $1,776 per month.

You save money upfront AND in the long run.

Key Takeaways: The Smartest Debt Strategy

  • Leave your low-rate mortgage alone!
  • Use a home equity loan to tackle high-interest debt.
  • Lower your payments AND reduce your total debt cost.
  • Avoid the debt trap of long-term refinancing!

Calculate Your Best Option

Want to see how this works with your numbers? Use our free Smart With Debt Calculator to compare:
Refinancing vs. Home Equity Loan
Total Interest Paid Over Time
Monthly Payment Breakdown

Download the calculator today!

Watch our most recent video to find out more about: Debt consolidation exposed: Do it the right way!

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