HELOC or Cash out Refinance?


Sandra T.

My ex boyfriend and I own a house. We've broken up but are on good terms, trying to work with each other to make it as low cost as possible. I've left and rented an apartment, and have *a lot* of credit card payments coming up associated with the cost of the new apartment and all the furniture, payments, etc. On top of that I'm a teacher so I have zero income during the summer. My checking account is almost totally diminished.

Originally we were going to do a HELOC for the amount of money I have tied up in the house, and then work together to pay off the interest. However now he is saying he wants to consider all of his options to make sure he's not paying more interest than he needs to. I'm stressed out because the HELOC is almost completely underway (should be able to access it this week or next week), and I *need* the funds in order to avoid interest on my credit cards.

Here is our financial information for the house for reference:

15 year conventional mortgage (taken out in 2016)
current principle balance: $193,099
current interest rate: 2.625%

amount I have in the house (that I want out): $40,000

*possible interest rate on HELOC: ??
*possible interest rate if we refinance to 30yr and do a cash out for my $40k: 3.42%


1. What interest are we looking at overall if we go ahead with the HELOC and pay it off within the next 5 years? He is likely going to sell the house and would have the funds available to pay it off completely. I keep using online calculators but they give me monthly payment plans and I can't figure out what the total cost would be in interest

2. Alternatively... how much more interest would be paid if he refinances to a 30 year mortgage and does a cash out of $40k for me?

I know eventually we need to just take my name off of the mortgage and call it a day, and I was thinking that if the cash out refinance is a better option we'll do it at that time. We opted to start with the HELOC as a way to get the ball rolling on they money side and keep my name on the mortgage in cash in a couple of years things change, we want to make things work, etc. But at this point my main goal is to access the money I have, and make it as low impact as possible to not cause issues.

Help please!

Erik Sandstrom

Mortgage Expert - Call 1-619-379-8999
Staff member
Loan Safe Mortgage
Jan 14, 2011
San Diego, California
Hi Sandra,
The option that you mentioned last sounds to me like the best option especially if you're no longer going to be together. If you're still obligated for a mortgage and let's say he loses his job, you're now responsible for paying it even though he may still be living in the property. I would definitely suggest a cash out refinance, maybe to a 30yr as mentioned. He can always pay more to the mortgage if he has the means to do so and that isn't that big of an impact on the interest rate you guys have currently.

The interest rates that not only you're being offered but currently have are pretty darn good, especially for a cash out refinance. Feel free to give me a call if you have any additional questions, I'd love to help if I can. 619-379-8999 or [email protected] - I am licensed in just about every state across the country.