A home equity loan is generally a second mortgage against your home, meaning it is a loan that you take out using your home as collateral without paying off your first mortgage. A refinance typically means that you’ll be paying off your existing first mortgage and replacing it with a new first mortgage.
Determining whether it’s best to refinance or to obtain a home equity loan can be complicated and depends on many factors. You should consider contacting your tax advisor to determine what makes the most sense for you. Comparing monthly payments of your existing first mortgage and a new home equity loan as opposed to a new first mortgage should help. You should also keep in mind the term of each of your loans, especially if monthly payment is not a significant issue for you.