HELOC or cash-out refinance? If your current mortgage rate is well below today's market, a HELOC usually lets you tap equity without giving that rate up. Freddie Mac's survey put the average 30-year fixed at 7.32% as of Oct. 22, 2026, up from 6.19% a year earlier. A cash-out refinance replaces your whole mortgage at the new rate.
When does a cash-out refi win? When your current rate is at or above today's, when you want one fixed payment, or when you need a large sum and value rate certainty over flexibility. The Consumer Financial Protection Bureau (CFPB) notes cash-out refis generally carry higher closing costs.
Data note: Rates come from Freddie Mac's Primary Mortgage Market Survey (week of Oct. 22, 2026). Product features come from the CFPB's HELOC guide. Tax treatment comes from IRS Publication 936. Not a loan offer; terms vary by lender.
The Rate Picture This Week
Freddie Mac PMMS, as of Oct. 22, 2026:
- 30-year fixed: 7.32%, down from 7.40% the prior week
- 30-year fixed a year ago: 6.19%
- 15-year fixed: 6.68%
If you bought or refinanced when rates were lower, a cash-out refi would reset your entire balance at today's level. For more on where rates are heading, see are mortgage rates going down?
How a HELOC Works
The Basics (CFPB)
- An open-end line of credit you can borrow from repeatedly, up to a limit
- Secured by your home equity: value minus what you owe
- Usually a variable rate; some plans let you convert part of the balance to a fixed rate
- Draw period to borrow, then a repayment period; some plans end in a balloon payment
The Fine Print
- Fees may include an appraisal, application, closing costs and sometimes annual or inactivity fees
- Right to cancel: under federal law you can cancel within three days after the account is opened and get your fees back
- Lenders can generally freeze or reduce your line if your home's value falls or your finances change
- Renting your home may be prohibited under some HELOC terms
- If you sell, you're generally required to pay off the HELOC in full
How a Cash-Out Refinance Works
- You replace your existing mortgage with a larger one and take the difference in cash
- One payment, fixed or variable
- CFPB: closing costs are generally higher, and the new rate may be higher than your current mortgage
- Can make sense if your current rate is near or above today's market, or if you want to consolidate a first mortgage and existing HELOC into one fixed loan
Side-by-Side
Choose a HELOC If
- Your first mortgage rate is meaningfully lower than today's
- You need money over time (a phased remodel, a pool, tuition)
- You can handle a variable payment
- You want lower upfront costs
Choose a Cash-Out Refi If
- Your current rate is at or above the market
- You need a large lump sum and want a fixed payment
- You plan to stay put long enough to recover closing costs
Consider a Home Equity Loan If
- You want a lump sum and a fixed rate without touching your first mortgage
Taxes and Equity Uses
- IRS Publication 936: interest is deductible as home mortgage interest only to the extent proceeds are used to buy, build or substantially improve the home securing the loan
- Remodel = possibly deductible; credit card payoff or a car = not
- Improvements may also add to your basis, which matters when you sell; see our Arizona capital gains guide
Questions to Ask Arizona Lenders
- What index and margin set my HELOC rate, and what are the caps?
- How long are the draw and repayment periods?
- Is there a balloon payment?
- What are the closing costs and any early termination fee?
- Can I convert part of the balance to a fixed rate?
- The CFPB suggests getting at least three HELOC estimates
“Many owners I talk with are sitting on real equity and a mortgage rate they'd never get again. For them, refinancing the whole loan to pull out cash rarely pencils. A HELOC used for a smart improvement can make sense, but I always ask how the project will look to the next buyer before you borrow against the house to pay for it.”
— Elizabeth Vijan, Tackett Team, eXp Realty
FAQ: HELOC vs. Cash-Out Refinance
Is a HELOC or a cash-out refinance better right now?
If your current rate is below 7.32%, a HELOC usually preserves it; a cash-out refi replaces it.
What is the difference between a HELOC and a home equity loan?
A HELOC is a revolving line, usually variable; a home equity loan is a lump sum, typically fixed.
Is HELOC interest tax deductible?
Only if used to buy, build or substantially improve the home, per IRS Pub. 936.
Do you have to pay off a HELOC when you sell your house?
Generally, yes, in full, from your sale proceeds.
Planning a Remodel or a Move?
I'll help you weigh which improvements pay off at resale in Scottsdale and Phoenix, and connect you with local lenders to compare HELOC and refinance options.
Elizabeth Vijan | Tackett Team, eXp Realty
Scottsdale & Phoenix Real Estate
Talk to Elizabeth · Call or text 602-885-7752
Sources: Freddie Mac: Primary Mortgage Market Survey · CFPB: What is a HELOC? · CFPB: What you should know about HELOCs (PDF) · IRS Publication 936: Home mortgage interest deduction
Disclaimer: General information, not financial, tax or legal advice, and not a loan offer. Rates and terms vary by lender and borrower; consult a licensed loan officer and tax professional. Information deemed reliable but not guaranteed. Equal Housing Opportunity.
Tackett Team, eXp Realty · Get in touch