How and When to Refinance a HELOC in 2026

Escape the Variable Rate Trap

If you opened a HELOC in 2022, you might have started with a 4% rate. Today, that same HELOC is likely charging you 9% or 10%. This is the danger of variable-rate debt in a rising rate environment. But you are not stuck. You can refinance a HELOC just like you refinance a primary mortgage.

Option 1: Refinance into a Fixed-Rate Home Equity Loan

This is the most common move. You take out a new Home Equity Loan (HELOAN) with a fixed interest rate and use the proceeds to pay off the HELOC balance to zero.

• Pros: Your payment is locked forever. No more rate hike anxiety.
• Cons: You lose the ability to re-borrow. Once you pay it down, you can't pull the money back out.

Option 2: Refinance into a New HELOC

Why replace one variable loan with another? The Teaser Rate. Many banks offer "Introductory Rates" of 5.99% or even 2.99% for the first 12 months to win new business. By moving your balance to a new lender, you can slash your interest costs for a year.

Option 3: Cash-Out Refinance (Primary Mortgage)

You can refinance your entire home loan (primary mortgage + HELOC) into one new, big primary mortgage.

WARNING: Only do this if your primary mortgage rate is high (6%+). If you have a 3% primary mortgage, DO NOT touch it! You will explode your interest costs.

The "Break-Even" Calculation

Refinancing isn't free. You will pay title fees, appraisal fees, and recording fees (typically $500 - $1,500).
Rule of Thumb: If you can lower your rate by 1.5% or more, and you plan to keep the debt for at least 2 years, refinancing makes mathematical sense.