Using Your Home Equity: What to Know

As home values increase, many homeowners are finding they’ve built equity in their homes over time. Home equity is the difference between your home’s current value and the amount you still owe on your mortgage. In some situations, that equity can become a financial tool to help cover major expenses or future goals.

Whether you’re planning home improvements, consolidating debt, or preparing for unexpected expenses, understanding your home equity options can help you make more informed financial decisions.

Common Ways to Access Home Equity

There are several ways homeowners may be able to borrow against their home’s equity, depending on their goals and financial situation.

Cash-Out Refinance

A cash-out refinance replaces your current mortgage with a new loan for a larger amount than what you currently owe. The difference is provided to you as cash at closing.

Homeowners may consider a cash-out refinance to:

• Fund home renovations 
• Consolidate higher-interest debt 
• Cover major expenses 
• Adjust mortgage terms while accessing equity 

This option may be helpful for those looking to combine refinancing with access to additional funds.

Home Equity Line of Credit (HELOC)

A Home Equity Line of Credit, or HELOC, provides flexible access to funds over time through a revolving line of credit.

A HELOC may be a good fit for:

• Ongoing home projects 
• Emergency expenses 
• Flexible borrowing needs 
• Expenses that may occur over time rather than all at once 

With a HELOC, you only borrow what you need during the draw period, similar to how a credit card works.

Home Equity Loan

A home equity loan allows you to borrow a lump sum upfront with fixed monthly payments and a fixed interest rate.

This option may work well for homeowners who:

• Know exactly how much they need to borrow 
• Prefer predictable monthly payments 
• Are funding a one-time expense or project 

Because the loan amount and repayment terms are fixed, some borrowers prefer the added payment stability.

Things to Consider Before Using Home Equity

Using your home’s equity can provide financial flexibility, but it’s important to carefully evaluate your long-term goals before borrowing against your home.

Questions to consider may include:

• How much equity do you currently have? 
• What are the funds being used for? 
• Will the borrowing improve your financial situation long term? 
• What monthly payment fits comfortably within your budget? 

Since your home serves as collateral, borrowing against home equity should be approached thoughtfully.

Finding the Right Option for Your Goals

Every homeowner’s situation is different, and the best solution depends on your financial goals, budget, and timeline.

If you’re considering using your home’s equity, our lenders can help you compare options, answer questions, and determine which solution may fit your needs best.