How to Refinance a HELOC: Your Options, Costs and Steps (2026)
The Scout Executive Summary
- Three ways to refinance: You can replace a HELOC with a new HELOC, pay it off with a fixed-rate home equity loan, or roll it into a new first mortgage. Each one changes your rate, your payment and how long you pay.
- Rolling it into your mortgage is usually a cash-out refinance: Under Fannie Mae rules, paying off a HELOC that was not used to buy the home makes the deal a cash-out refinance, which usually means a higher rate and a lower borrowing limit.
- Your unused credit line counts: If you refinance your first mortgage and keep the HELOC, Fannie Mae has lenders count the full credit limit, not just what you owe. Lowering the limit first can help you qualify.
- Plan for delays: Keeping a HELOC through a mortgage refinance needs your HELOC lender’s sign-off, which often takes 2 to 4 weeks. A new lender also has to wait out a three-day cancellation period before sending funds.
In this Article
- Can You Refinance a HELOC?
- Which Way to Refinance a HELOC Is Right for You?
- How Do You Replace a HELOC with a New HELOC?
- Should You Refinance a HELOC into a Home Equity Loan?
- Can You Roll a HELOC into Your First Mortgage?
- What Is HELOC Subordination?
- Can You Refinance Your Mortgage and Keep Your HELOC?
- What Do You Need to Qualify to Refinance a HELOC?
- How Much Does It Cost to Refinance a HELOC?
- When Is the Best Time to Refinance a HELOC?
- What Are the Steps to Refinance a HELOC?
- HELOC Refinance FAQ
Can You Refinance a HELOC?
Yes, you can refinance a HELOC at any time, during the draw period or the repayment period, as long as you have enough equity, credit and income to qualify for the new loan or line.
Is a new HELOC cheaper than yours? Compare your APR in minutes.
Refinancing means a new loan or line pays off your current HELOC. There are three main ways to do it:
- A new HELOC replaces your current line and usually starts a new draw period.
- A home equity loan pays off the line with a fixed-rate lump sum and a fixed monthly payment.
- A new first mortgage combines your current mortgage and HELOC into one loan.
You may not need to refinance at all. If your goal is a fixed rate, your current lender may let you lock part of your balance without closing costs. If your goal is a lower payment, a paydown or a longer repayment term from your current lender may get you there. See how to reduce a HELOC payment for those options side by side.
A new HELOC
A home equity loan
A new first mortgage, if your current rate is high
A new HELOC, if you can pay down the balance during the new draw period
A fixed-rate lock with your current lender, not a refinance
Which Way to Refinance a HELOC Is Right for You?
The right way to refinance a HELOC depends on your first mortgage rate, how soon you want the debt gone, and whether you still need to borrow.
Before you refinance, check your APR with a new HELOC lender. It won’t affect your credit score.
Homeowners who still need access to credit or want lower payments now
The rate stays variable, and interest-only payments mean the balance may not shrink
Homeowners who want a fixed rate and a set payoff date
No more borrowing, and closing costs can be higher than a HELOC
Homeowners whose current first mortgage rate is at or above today’s rates
Usually priced as a cash-out refinance and resets your whole mortgage
Start with your first mortgage rate. If it is well below today’s rates, keep it and refinance only the HELOC. If it is near or above today’s rates, a combined refinance is worth pricing. Then decide whether you still need to borrow. If you do, a new HELOC keeps that option open. If you don’t, a home equity loan gives you a fixed payment and a finish line.
How Do You Replace a HELOC with a New HELOC?
You replace a HELOC by opening a new line with a new lender, which pays off and closes your old line at closing, so your balance moves to the new line in one step.
Draw period ending? See if replacing your HELOC could work for your budget.
Here is what happens behind the scenes:
- The new lender orders a payoff. It asks your current lender for the exact amount needed to pay the line in full on the closing date.
- You sign a request to close the old line. Most new lenders require a signed letter telling your current lender to freeze and close the account, so it cannot be drawn again after payoff.
- The payoff counts as your first draw. Some online lenders require you to draw most of the line at closing. That usually fits a refinance, because the payoff is the draw.
- You get a new draw period. That often brings back interest-only payments, which lowers the bill but does not reduce the balance.
The biggest risk is the reset. On an $80,000 balance at 7.75%, a 20-year repayment payment is about $657. A new HELOC at 7.29% with interest-only payments drops that to about $486, but if you pay only the minimum for another 10 years, you will face the same jump again with nothing paid down. Make a plan to pay principal from the start.
Check two things before you apply. First, look for an early-closure fee in your current HELOC agreement. Many lenders that covered your closing costs charge them back if you close the line within the first two or three years. Second, compare the new lender’s margin with your current one. A lower margin is what lowers your rate for the life of the line. A low intro rate only lasts a few months. For lenders that fund quickly, see our list of the fastest HELOC lenders.
Should You Refinance a HELOC into a Home Equity Loan?
You should refinance a HELOC into a home equity loan if you want a fixed rate and a fixed payoff date and you no longer need to borrow from the line.
Is a new HELOC cheaper than yours? Compare your APR in minutes.
A home equity loan is a second mortgage paid out as one lump sum, with a fixed rate and equal monthly payments. When you use it to refinance, the lump sum pays off your HELOC and the line closes.
Rates on the two products are close right now. As of October 5, 2026, Curinos data put the average HELOC rate at 7.09% and the average fixed home equity loan rate at 7.42%, a gap of about a third of a percentage point. That small gap is the price of certainty: your rate will not change after the Fed’s next move.
On our $80,000 example, a 20-year home equity loan at 7.42% costs about $641 a month, close to the HELOC’s $657 repayment payment, with a rate that never changes. A 15-year loan costs about $738 but pays the debt off five years sooner.
Because a home equity loan is closed-end credit, you get a Loan Estimate after you apply and a Closing Disclosure before you sign. Use them to compare offers line by line. See our Arizona home equity loan guide for how these loans work and what lenders charge, and the fixed vs. variable HELOC guide if you are still weighing a fixed rate.
Can You Roll a HELOC into Your First Mortgage?
Yes, you can roll a HELOC into a new first mortgage, but under Fannie Mae rules it usually counts as a cash-out refinance, which often means a higher rate and a lower borrowing limit than a standard refinance.
Before you refinance, check your APR with a new HELOC lender. It won’t affect your credit score.
For a Fannie Mae eligible conventional loan, a standard refinance (Fannie Mae calls it a “limited cash-out refinance”) can only pay off a second lien that was used to buy the home, and the lender has to document that. If your HELOC paid for a remodel, debt payoff or anything else, paying it off makes the new loan a cash-out refinance. That brings three changes:
- Cash-out pricing. Lenders typically charge more for cash-out loans.
- A lower borrowing limit. Cash-out loans allow you to borrow a smaller share of your home’s value.
- A seasoning rule. For a cash-out refinance, the first mortgage being paid off generally has to be at least 12 months old.
Whether rolling it in makes sense comes down to your current first mortgage rate:
One $400,000 loan at an illustrative 7.53% cash-out rate costs about $2,805, saving about $133 a month
One $380,000 loan at 7.53% costs about $2,665, about $585 more each month
The first homeowner comes out ahead. The second gives up a 3% rate on $300,000 to refinance $80,000, which rarely makes sense. Keep in mind that both combined loans restart a 30-year term, so you may pay longer even when the payment drops. To see how the numbers work for you, use our guide to your blended interest rate and the HELOC vs. cash-out refinance comparison.
These rules apply to loans sold to Fannie Mae. FHA, VA, jumbo and portfolio lenders use their own rules, so ask any lender how it will classify your refinance before you apply.
What Is HELOC Subordination?
HELOC subordination is an agreement in which your HELOC lender agrees to stay in second place behind a new first mortgage, so you can refinance your mortgage without paying off the HELOC.
Draw period ending? See if replacing your HELOC could work for your budget.
Every loan secured by your home is a lien, and liens are generally paid in the order they were recorded. Your first mortgage was recorded before your HELOC, so it comes first. When you refinance, the old first mortgage is paid off and the new one is recorded after the HELOC. Without an agreement, the HELOC would move into first place, and lenders will not make a new first mortgage that sits behind it.
The subordination agreement fixes that. Your HELOC lender signs a document putting its lien behind the new mortgage, and it is recorded with your county. Fannie Mae requires a recorded resubordination agreement when a second lien stays in place through a refinance, unless state law already keeps the second lien in its place.
Your HELOC lender does not have to agree. It is choosing to stay behind a new loan, so it will review the deal first.
Can You Refinance Your Mortgage and Keep Your HELOC?
Yes, you can refinance your first mortgage and keep your HELOC, but only if your HELOC lender agrees to subordinate and your combined borrowing still fits the new lender’s limits, which count your full credit line.
Is a new HELOC cheaper than yours? Compare your APR in minutes.
Expect the subordination request to take about 2 to 4 weeks and cost about $150 to $400, plus a county recording fee. The HELOC lender usually checks your credit and its own combined loan-to-value limit before it signs. A request is most likely to be turned down when the new first mortgage is larger than the old one.
The part most homeowners miss is how the credit line is counted. For a Fannie Mae eligible conventional loan, lenders calculate a ratio called HCLTV (home equity combined loan-to-value). It adds your new first mortgage to your full HELOC limit, even if you owe nothing on it.
74%
90%
A large unused line can push you over a lender’s limit. If that happens, ask your HELOC lender to permanently reduce the credit limit. Under Fannie Mae’s rules, a line reduced without a permanent change to the agreement still counts at its original limit, so get the reduction in writing as a permanent modification.
Scout’s Tip
Refinancing your first mortgage while you have a HELOC? Tell your loan officer about the HELOC on day one and ask them to send the subordination request with your application, not after underwriting. Ask your HELOC lender for its subordination fee, turnaround time and combined loan-to-value limit before you lock your rate. A rate lock that expires while you wait on subordination can cost you more than the fee.
What Do You Need to Qualify to Refinance a HELOC?
To refinance a HELOC, you generally need enough equity to stay within the lender’s combined loan-to-value limit, a credit score that meets its minimum, and income that supports the new payment.
Before you refinance, check your APR with a new HELOC lender. It won’t affect your credit score.
Every lender sets its own rules, but these are the usual checkpoints:
- Equity. Many lenders cap your combined loan-to-value (all loans on the home divided by its value) at 80% to 85% for a new HELOC or home equity loan. Your home is revalued with an appraisal or an automated estimate.
- Credit score. Many HELOC lenders start around 620 to 680, with the best rates often at 740 and above.
- Debt-to-income ratio. Many lenders want your monthly debts, including the new payment, under about 43% to 45% of your gross monthly income.
- Documents. Expect to provide pay stubs or tax returns, your current HELOC and mortgage statements, homeowners insurance and ID.
Your home’s value matters more than it did when you opened the line. If prices in your area have dipped, you may qualify for less than you owe, which can block a new HELOC. Run your numbers first with our home equity calculator. For the detailed rules, see the HELOC qualification requirements and HELOC credit score requirements guides.
How Much Does It Cost to Refinance a HELOC?
Refinancing into a new HELOC can cost little or nothing upfront, a home equity loan often costs a few hundred to a few thousand dollars, and a first mortgage refinance usually costs the most, because it carries closing costs on the whole new loan.
Draw period ending? See if replacing your HELOC could work for your budget.
These are the costs to look for:
- Closing costs on the new loan. These can include an appraisal, title search, recording fees, an origination fee and document fees. Many HELOC lenders cover them in exchange for an early-closure fee if you close the new line within a few years.
- An early-closure fee on your old HELOC. Check your current agreement before you apply.
- A subordination fee, usually about $150 to $400, if you keep the HELOC through a mortgage refinance.
- An annual fee on the new line, if it has one.
To see whether a refinance pays off, divide the total upfront cost by the monthly savings. If a refinance costs $3,000 and saves $90 a month, you break even in about 33 months. If you might sell or refinance again before then, the refinance probably costs more than it saves.
Scout’s Tip
Not sure a refinance will actually save you money? Get quotes from at least three lenders on the same day, so every offer is priced against the same prime rate. Compare the margin, the closing costs and any early-closure fee side by side, then check today’s averages on the Arizona home equity rates page to see whether an offer is competitive.
When Is the Best Time to Refinance a HELOC?
The best time to refinance a HELOC is usually before your draw period ends, while your income and credit are strong enough to qualify and before the payment jump arrives.
Is a new HELOC cheaper than yours? Compare your APR in minutes.
Good times to look:
- Six to twelve months before your draw period ends. That leaves time to shop, qualify and close before your payment rises. For the payment-jump math, see the Year 10 HELOC payment guide.
- After your credit score improves. A higher score can earn a lower margin, which lowers your rate for the life of the line.
- After your home’s value rises. More equity can mean a lower rate tier and more room to qualify.
- After any early-closure window passes. Waiting a few months can save a fee of several hundred dollars.
Timing the Fed is harder. The Fed raised rates in September 2026, and its next decisions are October 27 to 28 and December 8 to 9. A fixed-rate home equity loan locks in today’s rate no matter what happens next, while a new HELOC will keep moving with prime.
Refinancing also does not change how your interest is taxed. HELOC interest is deductible only when the money was used to buy, build or substantially improve the home, and the One Big Beautiful Bill Act made that rule permanent. See our guide to HELOC interest tax deductibility and talk with a tax professional.
What Are the Steps to Refinance a HELOC?
To refinance a HELOC, gather your current loan details, price your options, apply with the lender that offers the best total cost, and confirm your old line is closed after closing.
Before you refinance, check your APR with a new HELOC lender. It won’t affect your credit score.
- Pull your HELOC agreement and latest statement. Note your balance, credit limit, margin, draw period end date and any early-closure fee.
- Ask your current lender first. A fixed-rate lock, a longer repayment term or a rate discount may solve the problem without a refinance.
- Estimate your equity. Add up what you owe on the home and divide by a realistic value to see where you stand.
- Get three quotes on the same day. Compare margin or fixed rate, closing costs, annual fees and early-closure fees.
- Apply and order the valuation. The lender will verify income, pull credit and appraise or estimate your home’s value.
- Request subordination early, if you are refinancing your first mortgage and keeping the HELOC.
- Close and wait out the right to cancel. When a new lender refinances a loan or line on your primary home, federal rules give you three business days to cancel, and funds are sent after that.
- Confirm the old line is closed. Ask for written confirmation that the account is closed, and check that the lien release is recorded with your county.
Step 8 matters more than it looks. A paid-off HELOC that is left open can still be drawn on, and an unreleased lien can cause title problems when you sell.
HELOC Refinance FAQ
Yes, many lenders will refinance or renew a HELOC they already hold, sometimes with lower costs. A same-lender refinance with no new money also skips the federal three-day cancellation period, so it can close faster.
Yes, you can refinance a HELOC during the draw period. Many homeowners do it before the draw period ends so they can qualify while their income is stable and avoid the payment jump.
Refinancing into a new HELOC starts a new draw period, which often brings back interest-only payments. Refinancing into a home equity loan or a first mortgage does not, because those loans have fixed payoff schedules.
It is harder but sometimes possible. Many HELOC lenders start around 620 to 680, and lower scores usually mean a higher margin. If you cannot qualify, see our guide to home equity loans for bad credit for other options.
Refinancing adds a hard inquiry and a new account, which can lower your score slightly for a short time. Closing the old line can also change your credit utilization. On-time payments on the new loan help your score recover.
Your HELOC either gets paid off as part of the refinance or stays open behind the new mortgage through a subordination agreement. If your HELOC lender refuses to subordinate, you will need to pay off the HELOC to close.
Some lenders refinance HELOCs on investment properties, but the rules are stricter, with lower borrowing limits and higher rates. For details, see our Arizona investment property HELOC guide.
A new HELOC or home equity loan can close in about one to four weeks, depending on the lender and whether a full appraisal is needed. A first mortgage refinance that needs subordination often takes longer, sometimes 60 days or more.
EquitySquirrel is an educational resource operated by Scout Media LLC, not a lender. This content does not constitute financial, legal, tax, or lending advice. HELOCs and home equity loans are secured by your home, and missed payments can result in foreclosure. Payment examples are illustrative, assume constant rates, and exclude closing costs. Fannie Mae rules described here apply to loans sold to Fannie Mae; other loan programs and lenders set their own requirements. Rate averages are from Curinos and Bankrate as published in late September and early October 2026 and will change. Confirm current terms directly with lenders. Consult a licensed financial or tax professional before making decisions about your home equity. Aleksandra Kadzielawski, Lic #SA694336000.
