HELOC vs. Refinance: Why High Interest Rates Make This the Smarter Move
The Refi Temptation
If you’re a homeowner sitting on equity, you’ve probably considered a cash-out refinance. It sounds appealing: combine your mortgage and get cash back.
But in 2025, with interest rates still hovering above 7%, that move could cost you more than you think.
"I almost refinanced my 3.75% mortgage until I saw how much extra I’d pay over time."
The Real Difference
When Refinance Doesn't Make Sense
Let’s say you locked in a $300,000 mortgage at 3.5%. Now you want to access $30,000 for home repairs or debt consolidation, buying a new property or any other purpose.
If you refinance:
You lose your 3.5% rate and your new mortgage will jump to 7.25%
You restart your loan term—likely 30 years again
That means you’re paying a much higher rate on the entire $300k, not just the $30k you need.
When a HELOC Wins
Keep your current mortgage untouched
Borrow only what you need
Get faster access to funds – no lengthy refi process
With Upstart, you benefit from AI underwriting that can look beyond just credit scores
"I used a HELOC to cover major repairs without touching my mortgage. I still have my low rate—and my sanity."
The Bottom Line
In a high-rate world, flexibility is power. A HELOC gives you the breathing room you need—without putting your entire mortgage at risk.