If you are a homeowner interested in cashing out equity in your home, how do you know if a home equity loan or refinancing with cash back is a better choice for you? Here is what you need to know in order to make an informed decision.

Home equity loans and cash out mortgage refinancing both have their benefits. Choosing the right option for you means determining how you can access your equity without paying too much in fees and interest.

Refinancing your mortgage with cash back means you are refinancing your primary mortgage for a higher amount than you currently owe. The difference between your original mortgage and the new one is your equity.

Home equity loans come in two flavors: 2nd mortgages and home equity lines of credit. A 2nd mortgage will provide you a lump sum at a fixed interest rate. Home equity lines of credit function like a credit card account tied to your home equity with a variable interest rate.

If the amount you are looking to borrow is small you could save money in fees by taking out a home equity loan unless you have already been considering refinancing your mortgage for a lower or fixed interest rate. Home equity loans are useful for accessing smaller amounts of equity and can provide you a revolving credit line. This is a better option if you want to pay off the loan quickly and not be overwhelmed with lender fees.

If you have been considering refinancing or wish to borrow a large amount of your home