Looking to tackle a few summer home improvement projects? Whether you’re dreaming of a backyard upgrade, energy-efficient windows, or a full kitchen refresh, there’s one question every homeowner faces:
How will you pay for it?
If you’ve built equity in your home, you may have more financing power than you think. Two of the most popular home equity loan options are a Home Equity Line of Credit (HELOC) and a Cash-Out Refinance. Both can help you fund your summer renovation—but they work in very different ways.
Let’s break down which one might be right for your project, your timeline, and your financial goals.
What Is a HELOC?
A HELOC, or Home Equity Line of Credit, gives you revolving access to your home’s equity—similar to a credit card but backed by your property.
With a HELOC, you can borrow only what you need, when you need it, making it ideal for phased or evolving projects. During the draw period, you’ll typically make interest-only payments, helping manage cash flow while you tackle your projects.
Best for:
Flexible summer projects like landscaping, outdoor structures, home office updates, or ongoing improvements.
What Is a Cash-Out Refinance?
A Cash-Out Refinance replaces your current mortgage with a new one, ideally at a competitive rate—and allows you to withdraw a lump sum of cash from your available equity.
This option is great for large, one-time projects where upfront funds are essential. You’ll roll your renovation costs into your mortgage and make one consistent monthly payment—usually with a fixed interest rate.
Best for:
Big-ticket renovations like kitchen remodels, room additions, or when you’re already considering a mortgage refinance.
Side-by-Side Comparison:
Payout Style:
- HELOC: Borrow as needed, like a credit card
- Cash-Out Refinance: Receive a lump sum at closing
Best For:
- HELOC: Flexible or ongoing projects
- Cash-Out Refinance: Large, upfront renovations
Interest Rate:
- HELOC: Usually variable
- Cash-Out Refinance: Usually fixed
Loan Structure:
- HELOC: Adds to your existing mortgage
- Cash-Out Refinance: Replaces your current mortgage
Repayment:
- HELOC: Interest-only during the draw period
- Cash-Out Refinance: Standard monthly mortgage payments
How to Choose the Right Summer Renovation Financing
When deciding between a HELOC and a cash-out refinance, start by considering the size and timeline of your renovation. If you’re planning a phased or ongoing project, a HELOC may be the better fit thanks to its flexible, on-demand access to funds. A HELOC will not affect your current mortgage interest rate for borrowers who are currently locked in to a low interest rate. On the other hand, if your project requires a large upfront investment—like a full remodel or major addition—a cash-out refinance may provide the lump sum you need.
You’ll also want to factor in how much equity you’ve built in your home, your current mortgage interest rate, and whether refinancing makes sense for your overall financial picture. Additionally, consider how long you plan to stay in the home; some options may be more beneficial in the short term, while others pay off over time.
In short, if flexibility is your priority, a HELOC might be the right tool. If you’re seeking fixed payments and full funding from the start, a cash-out refinance could be the smarter choice.
Use Your Home Equity to Fund Your Summer Project
Your home equity isn’t just value on paper—it’s a powerful tool to help bring your renovation goals to life.
Whether you’re tackling small upgrades or major improvements, Supreme Lending is here to guide you through your options. From HELOCs for summer projects to cash-out refinance solutions, we’ll help you choose the path that fits your home and your future.
Talk to your Supreme Lending Dallas-Fort Worth loan officer today to get started with confidence!