If you want to turn some of your Texas home's equity into cash, the two most common options are a home equity line of credit (HELOC) and a cash-out refinance. Both borrow against your equity, but they work very differently — especially in what happens to the mortgage you already have.
The core difference
A cash-out refinancepays off your existing first mortgage and replaces it with a new, larger loan. You take the difference in cash, and your whole mortgage balance moves to the new loan's rate and term.
A HELOCis a separate line of credit that sits behind your first mortgage as a second lien. Your first mortgage — rate, balance, and payment — doesn't change. You borrow only against the line.
Side-by-side comparison
| HELOC | Cash-out refinance | |
|---|---|---|
| Your first mortgage | Stays in place, unchanged | Paid off and replaced |
| Rate applies to | Only what you draw on the line | Your entire new mortgage balance |
| How you get funds | Revolving line — draw, repay, draw again during the draw period | One lump sum at closing |
| Texas homestead max | 80% CLTV | 80% LTV |
| Texas 12-day notice + 3-day rescission (homestead) | Applies | Applies |
| Payments early on | Interest-only on the amount drawn during the 3-year draw period (Best Suited Mortgage program) | Principal and interest on the full new balance |
The Texas twist: both are §50(a)(6) loans on a homestead
In many states a cash-out refinance can reach a higher loan-to-value than a HELOC. In Texas, a cash-out refinance of your homestead is itself a home equity loan under Article XVI §50(a)(6). That means the same 80% cap, 12-day notice, and 3-day rescission period apply to both options. You generally can't get more cash out of a Texas homestead by choosing a refinance over a HELOC.
When a HELOC usually makes more sense
- Your current first-mortgage rate is lower than today's rates. A refinance would move your whole balance to a higher rate; a HELOC leaves it alone.
- You need money over time — for a renovation in phases, tuition, or a cash reserve — rather than one lump sum.
- You want to keep your existing loan's term. Refinancing restarts the clock on your mortgage.
When a cash-out refinance can make more sense
- Today's rates are at or below your current first-mortgage rate.
- You want a single fixed payment instead of a first mortgage plus a separate line.
- You want to change your mortgage term at the same time.
Best Suited Mortgage focuses on HELOCs. If a refinance looks like the better fit for your situation, we'll tell you.
Run your HELOC numbers
Best Suited Mortgage offers Texas HELOCs from $25,000 to $750,000 on primary residences (up to 80% CLTV), with a typical close in 12–15 days. 75% of the line is drawn at closing, and checking your rate uses a soft credit pull. Use the HELOC pricer to see an estimate, or review the requirements first. Own a rental? See the investment property HELOC.
See your numbers
Check your Texas HELOC rate in minutes.
Soft credit pull only for your rate check.