A HELOC (home equity line of credit) is a second loan you can borrow from as you need it, and you keep your current mortgage. A cash-out refinance replaces your current mortgage with a new, bigger loan, and you get the difference in cash. If your current rate is low, a HELOC lets you keep it. If you want one fixed payment, a cash-out refinance may fit better. For most conventional and FHA cash-out refinances on a one-unit home you live in, the new loan can be up to 80% of the home's value.
Many homeowners in Nashville, Franklin, and Brentwood have built up equity. Equity is your home's value minus what you owe. There are two common ways to turn it into cash.
| HELOC | Cash-out refinance | |
|---|---|---|
| Your current mortgage | You keep it | It gets paid off and replaced |
| How you get money | Borrow as you need it during a "draw period" (for example, 10 years) | One lump sum at closing |
| Interest rate | Usually variable, so payments can change | Can be fixed for the whole loan |
| How much you can borrow | Set by each lender | Up to 80% of value for most conventional and FHA loans on a one-unit home you live in |
| Closing costs | Lenders can charge fees, so ask for the full list | You could pay many of the same costs as when you got your first mortgage |
| Change your mind after signing | For most loans on your main home that are not used to buy it, you get three business days to cancel | |
Watch out: HELOC payments can jump when the draw period ends and the repayment period starts. The CFPB says payments are often much higher then. Lenders can also freeze your line if your home's value drops a lot.
Watch out: a cash-out refinance resets your whole mortgage. That can mean a longer loan and more total interest.
| Step | Amount |
|---|---|
| Home value | $600,000 |
| 80% of value (cash-out maximum for most conventional and FHA loans) | $480,000 |
| Minus what you owe now | $300,000 |
| Most cash you could take out, before closing costs | $180,000 |
With a HELOC, the amount depends on the lender's own limit. If a lender let your two loans add up to 80% of the value, the line could also be up to $180,000. Some lenders allow more and some allow less. This example is just math and is not a loan offer.
A HELOC is a second loan you borrow from as needed, and you keep your current mortgage. A cash-out refinance pays off your current mortgage with a new, bigger loan and gives you the difference in cash.
Often, yes. A HELOC lets you keep your current low-rate mortgage. A cash-out refinance would replace your whole loan at today's rate.
For most conventional and FHA cash-out refinances on a one-unit home you live in, the new loan can be up to 80% of the home's value. Subtract what you owe to see the most cash you could get before closing costs.
Usually. The CFPB says most HELOCs have a variable rate, so your payment can change. Some let you lock part of the balance at a fixed rate.
For most loans on your main home that are not used to buy it, you have three business days to cancel. You must tell the lender in writing.
For a Fannie Mae conventional cash-out refinance, the mortgage you pay off must be at least 12 months old, and at least one borrower must have been on the title for six months, with some exceptions. Other loan types have their own rules.
Not sure which one fits? I can price a HELOC and a cash-out refinance side by side for your Nashville, Franklin, or Brentwood home. Call me at (615) 495-6594, email travis@heathrowmtg.com, or start an application.
Figures checked October 11, 2026. Rules can change, and lenders can set tighter limits. Examples are for illustration only and are not a loan offer.
