$50,000 home equity loan vs. $50,000 cash-out refinance: Which is better heading into 2026?
If you need to borrow a large amount of money, such as $50,000, then your home equity may offer one of the few viable ways to do so right now. With the median home equity amount worth hundreds of thousands of dollars currently and home equity levels hitting a cumulative high earlier this year, this is likely one of your most robust funding sources going into 2026. And there are multiple ways in which it can be accessed, with home equity loans and cash-out refinances being two of the more prominent.
But these products don't work the same way, even if the money comes from the same source. And in the evolving interest rate environment of late 2025, there's a strong case to be made for choosing one over the other, especially for such a large amount as $50,000. Between a home equity loan and a cash-out refinance, then, which is the better way to actually access this money now? That's what we'll detail below.
Start by seeing how much home equity you'd be eligible to borrow here.
$50,000 home equity loan vs. $50,000 cash-out refinance: Which is better heading into 2026?
While each homeowner's situation differs, there's a compelling argument for supporting a $50,000 home equity loan instead of a $50,000 cash-out refinance heading into the new year. Here's why:
Home equity loan rates have been declining
It's always an advantage when you can secure a borrowing product in which average rates are declining, not rising. And that's exactly what homeowners will get with a home equity loan now, with average rates on the product just around 8% now. This makes a home equity loan significantly less expensive than a personal loan and around three times cheaper than a credit card, which has an average rate near a record high right now.
And, if you shop around for lenders outside of the one that currently holds your mortgage loan, you may be able to find a below-average rate. With multiple Federal Reserve rate cuts issued in the final months of 2025, homeowners should look to take advantage of this cooler rate climate as best as they can. They can do that more effectively with a home equity loan instead of a cash-out refinance.
See how low your current home equity loan rate offers are now.
Cash-out refinancing will require a mortgage rate exchange
A cash-out refinance will require homeowners to take out a new mortgage loan. They will then use that new loan to pay off their current balance before keeping the difference between the two as cash for themselves, in this example $50,000. But that will also require a mortgage rate exchange, which can be ineffective if you have a current rate materially lower than what's available now (as millions of American homeowners do). A home equity loan, however, will leave your current mortgage rate and terms intact while still providing you with the $50,000 you need right now.
Home equity loans can be refinanced
Let's say you take out a $50,000 home equity loan now and interest rates continue to decline, as many expect to happen in 2026. The good news is that you can refinance your home equity loan to take advantage of those lower rates, either with a new, lower-rate home equity loan or even with a variable-rate home equity line of credit (HELOC).
But a cash-out refinance doesn't offer this opportunity. To exploit cooler rates in the future, borrowers will need to explore other borrowing options or even potentially complete a new mortgage refinance application all over again, both complicating mortgage repayments each month and further delaying the mortgage payoff end date.
The bottom line
There is no definitive answer to the question regarding whether a $50,000 home equity loan or $50,000 cash-out refinance is the right move to make for 2026. For some homeowners, a cash-out refinance can be the better option. But for many others, a $50,000 home equity loan now, with a low interest rate, the ability to maintain your currently low mortgage rate and the inherent potential to always be refinanced, makes more financial sense. Carefully evaluate both, however, before making a final decision and consider speaking with a home equity lender who can answer your questions and help you build an affordable repayment plan.
