If you want some advice from someone who does professional sewing:
Look at the units sold by industrial sewing supply shops. They have radically different designs than the typical modified soldering iron, and for good reason. They perform well, but are often designed to cut through dozens of layers of fabrics in one movement. They offer a smooth rolling cut that will heat seal the ends at just the right temp. They of course are not in the $20 range, but it should point out the features you would be looking for. A quality hot knife costs more than a consumer sewing machine.
In reality, you're looking for an overkill solution that doesn't work the way you think it does. Heat sealed ends are not fray free in most materials after a little bit of use are are still designed to be hemmed in for most applications.
For those who are talking about heat sealing fabrics together - it doesn't work well with most of our ultralight fabrics. It melts the stuctural fibers together, yes, but it easily tears out unless you are using fabrics designed to be hot sealed. You can use the hot sealer on a vacuum sealer to experiment for yourself. Silnylon will make very promising looking forms with a hot sealer, but it rips the fabric next to the melt with around 2 lbs of pull.
When I first started hot sealing edges I found a good cheap solution though:
Use a roller cutter blade for patterns (a new blade is required for thin fabrics) for the cutting
Before handling the material much, take the material in hand and use a micro torch (often $5-15) and run it around the outside edge blowing 90 degrees from the fabric aiming about 1/4"-1/2" from the fabric as though you are aiming into the air. You'll see it begin to bead the end fibers rather quickly. You'll need practice to keep an even control but it does the job quite nicely.