How can I take advantage of my home’s equity?

Key Takeaways:

• There are four main ways to take advantage of your home equity. You can sell your home, get a cash-out refinance, or borrow against your equity with a home equity loan or line of credit.
• With a cash-out refinance, you receive the money in one lump sum.
• With a home equity line of credit (HELOC), you receive the money as needed over time through a revolving line of credit similar to a credit card.

When was the last time you had your home appraised? With the rising cost of housing, you may have built up more equity than you think. This equity is a valuable asset you can put to work to consolidate higher-interest credit debts, pay for higher education, or cover medical expenses. 

Home equity example

Your equity is the current value of your home minus the amount you owe. Here’s a quick example:

Appraised Value  -  Outstanding Loan Amount  =  Equity
$260,000  -  $180,000  =  $80,000 

4 ways to access your home equity¹ 

The first consideration is whether you want to stay in your home or sell it. 

1. Sell your home

If you decide to put your home on the market, your list price will reflect the equity you’ve gained, minus:

• Repairs 
• Recording and attorney fees
• Real estate commission
• Closing costs

Ask your real estate professional for a seller net sheet, which is the amount of money you’ll receive from your home sale after expenses. 

2. Get a cash-out refinance² 

With a cash-out refinance, you replace your current mortgage with a new mortgage for more than you owe. At closing, you receive the difference in cash in one lump sum.

Here’s an example:

With your new mortgage, you’ll have closing costs and may have a new rate that changes your monthly mortgage payment.

Use our refinance calculator to get a better idea of what to expect.

3. Open a HELOC 

A HELOC allows you to borrow against you equity as needed over time. It’s a revolving line of credit like a credit card, but it usually has significantly lower rates.

Use our HELOC calculator to see how much equity you may be able to tap into.

4. Take Out a Home Equity Loan 

With a home equity loan, you receive the funds upfront and all at once. You’ll have monthly payments with a fixed interest rate you can lock in so it stays the same even if rates go up in the market.