Best Ways to Leverage Your Home Equity

Need some extra cash? Your home equity is a powerful tool you can use to get the cash you need.
Dec 07, 2022

One of the many advantages of owning a house is seeing an increase in your property’s value when the real estate market is in your favor. You can boost your profit once you put your home up for sale, and you’ll also have an appreciating asset that grants you the ability to leverage equity as needed.

If you have equity and don’t know how to take advantage of it, you’ve come to the right place. We’ll teach you how to leverage your home equity without hindering your long-term financial goals.

What is Home Equity?

Home equity is the difference between the value of your home and how much you owe on your mortgage. The amount of equity you have in your property changes when you make your mortgage payments and as the housing market fluctuates. 

If your loan balance is worth more than your house’s value, you have negative equity and are considered underwater on your mortgage. However, if your loan balance is lower than your property’s worth, you have positive equity and can turn it into cash.

Ways to Leverage Your Home Equity

  1. Make Home Improvements

Home improvement is a common use of a home equity loan. Besides upgrading your home’s appearance or functionality, home improvements can also boost your property’s value.

The best house improvement project includes minor kitchen renovations, refinishing or installing hardwood floors, and minor bathroom remodeling.

If you’re using your home equity for house improvements, be mindful not to over-improve. Huge upgrades that aren’t on par with the overall value of your house will have a smaller chance of regaining the cash spent on the home renovations.

  1. Higher Education

A HELOC or home equity loan may be an option to fund your kids’ post-secondary education. The benefit of using a home equity loan or HELOC is that you potentially secure a lower interest rate than other student loan options. 

  1. Medical Expenses

If you struggle to cover outstanding medical bills, your available home equity can help you make those payments. By tapping your equity to eliminate your medical debt, you can avoid getting harassed by debt collectors and work toward improving your FICO score. 

You can also secure a better interest rate and monthly payments if you rely on your home equity instead of using a credit card.

  1. Consolidating High-interest Debt

Since the equity in your property secures HELOC and home equity loans, they can grant you the ability to borrow cash at a lower interest rate than unsecured types of credit, like personal loans and credit cards. Using these loans to pay off higher-interest debts is a great way to save money.

The Bottom Line

Make responsible decisions when you borrow against your home’s equity. Remind yourself what it took to build the equity you have and what’s the best way to use the cash from your property’s equity,

Contact our helpful mortgage advisors if you need more advice on leveraging your home equity.


* Specific loan program availability and requirements may vary. Please get in touch with your mortgage advisor for more information.