Refinance vs HELOC: How Lisa Paid Off $38K in Debt
- By Jim Blackburn
- on
Client Profile:
- Name: Lisa
- Age: 46
- Occupation: Interior designer (self-employed)
- Goal: Eliminate high-interest credit card debt and fund a small renovation
- Location: Tampa, FL
The Situation
Lisa owned her home for 7 years and had over $220K in equity built up — but she was juggling $38,000 in credit card debt and had paused a long-overdue kitchen remodel.
She came to us unsure whether to refinance her whole loan, open a HELOC, or do nothing and “wait until rates drop.”
We used the Refi vs. HELOC Comparison Worksheet to help her map the real cost of each option.
The Strategy
Lisa’s mortgage had a 3.125% rate she didn’t want to lose. A full refinance would’ve raised her rate unnecessarily — so we offered a combo strategy:
- Keep her existing first mortgage
- Open a $60,000 HELOC at 7.25%
- Use $38K to pay off all credit cards
- Reserve $22K for her remodel and emergency cushion
- Plan to refinance in 2–3 years if rates improve
The Results
Outcome | Result |
Monthly Debt Payments (Before) | ~$1,130 (minimums only) |
New HELOC Payment (Interest-Only) | ~$362 |
Monthly Cash Flow Gained | +$768/month |
Renovation Budget Secured | $22,000 |
Mortgage Rate Preserved | 3.125% |
Lisa now tracks all expenses in one place, writes off interest related to home improvement, and plans to refinance into a fixed second when rates fall.
What Lisa Said
“This was the smartest financial move I’ve made in 10 years. I thought a refinance was my only option, but the HELOC preserved my rate and solved my real issue: cash flow.”
Takeaway for Readers
There’s no one-size-fits-all answer. But when you understand how and why to use your equity strategically, you can free up cash, protect your rate, and move forward without fear.
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