If your current first-mortgage rate is lower than today's rates, a fixed-rate second mortgage usually makes more sense because it leaves your low rate untouched. If your current rate is higher than today's market, a cash-out refinance can lower it and give you cash in one loan. In Texas, both are capped at 80% of your homestead's value.
Key takeaways
- Low existing rate? Look at a second mortgage first
- High existing rate? A cash-out refi may do two jobs at once
- Compare the blended cost, not just the new rate
- Both follow Texas homestead rules on your primary home
Side by side
| Cash-out refinance | Fixed-rate second mortgage | |
|---|---|---|
| Your first mortgage | Replaced with a new, larger loan | Stays exactly as it is |
| Number of payments | One | Two (first + second) |
| Best when | Today's rates are at or below your current rate | Your current rate is lower than today's |
| Closing costs | Based on the full new loan amount | Based only on the cash you borrow |
| Texas homestead limit | 80% combined | 80% combined |
The question that usually decides it
What is the rate on your current mortgage? If you locked in a low rate, refinancing the whole balance to pull out cash means giving that rate up on every dollar you already owe. A second mortgage only prices the new money.
Compare the blended cost
The fair comparison is the combined cost of your first and second mortgage against the cost of one new cash-out loan. We run both side by side so you can see the real difference, not just the headline rate.
About our closed-end second
- Fixed rate and fixed payment
- Loan amounts up to $850,000
- Credit scores from 660
- No prepayment penalty
- Your first mortgage stays untouched
Program guidelines as of October 2026 and subject to change. Not all applicants will qualify. Homestead loans are subject to Texas Constitution Section 50(a)(6).
New to the Texas rules? Read Texas cash-out refinance rules, explained.
Common questions
What is a closed-end second mortgage?
A fixed-rate loan for a set amount that sits behind your first mortgage. You receive the cash up front and repay it with a fixed payment.
Is a second mortgage the same as a HELOC?
No. A HELOC is a line of credit you draw from over time, usually with a variable rate. A closed-end second is a one-time lump sum, typically with a fixed rate.
Do I have to refinance my first mortgage to get a second?
No. A second mortgage sits behind your existing first mortgage, which stays exactly as it is.
Brad or Buddy will review your goals and send you a personal game plan within the hour. No credit pull.
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