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Cash Out Refinance or Home Equity Loan - Which is better?

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phxphun
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Cash Out Refinance or Home Equity Loan - Which is better?

I'm in the early process of refinancing to take $15000 cash out for a remodel project.  I'm getting cold-feet because I'm wondering if a Home Equity Loan might be less-costly in the long run. 

My current mortgage is a 3.375% APR, 5/1 ARM set to adjust in 2 years, with a balance of $344,000 and 27 years remaining on the loan.

 

Here are the terms on the new options I've been approved for:

Refinance (no cash out) -

3.25% APR, 5/1 ARM for 30 years.  Total cost to refinance is $400 if I don't take any cash out.  This will lower my current mortgage payment by $90/mo.

Cash Out Refinance -

3.25% APR, 5/1 ARM for 30 years.  Total cost to refinance is $1400 if I take $15000 cash out.  With this option my mortgage payment will remain the same as it currently is under my 3.375% existing loan.

Home Equity Loan -

4.5% APR on $15000 for 8 years. No loan costs. 

 

If I go with the Home Equity Loan, I will also do the no cash out Refinance, to lower my current mortgage payment by $90/mo.

 

Do the Cash Out and Equity Loans appear to be somewhat comparable in overall costs?

 

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