Choosing the optimal home equity extraction product depends on whether you have an exceptionally low first mortgage rate that you wish to preserve.
1. Equity Extraction Product Comparison Matrix
| Equity Product | Interest Rate Structure | Repayment Mechanics | Preserves 1st Mortgage Rate? |
|---|---|---|---|
| Home Equity Line of Credit (HELOC) | Variable (Prime Rate + Margin) | 10-Year Interest-Only Draw / 20-Year Amortization | Yes (2nd Lien Position) |
| Fixed Home Equity Loan | Fixed Annual Percentage Rate | Fixed Monthly Principal & Interest Payment | Yes (2nd Lien Position) |
| Cash-Out Refinance | Fixed or Adjustable 1st Mortgage Rate | Single new 15 or 30-year amortized loan | No (Replaces entire 1st mortgage) |