Given equal numbers, would HELOC vs Cash Out Refi be the same?
So, here's what I mean:
For simplicity sake, lets say both a HELOC and Cash-Out Refi have the same rate and I'm ignoring any closing costs. If I paid the same amount of money in the same amount of time, would either option basically be the same?
So in other words, given these two scenarios:
- 1. 50k Cash Out Refi. Pay off the 50k principal in 5 years.
- 2. 50k HELOC. Pay off the 50k principal in 5 years.
Do I end up paying the same amount of interests for both? Or do I some how end up paying more with #1 because it's a longer term loan? I imagine if I'm paying off the principal from #1, that it's lowering the interests paid and is essentially "removing" the 50k from the loan as if it was never there.
My reasoning is that I want to go with #1 so that I have the option to pay slower if need be. #2 would force me to pay it off ASAP, especially given the variable rate after the introductory period.
Hope this makes sense! Thanks for the help.