What to do with your home equity

As a homeowner, you could be sitting on a gold mine and not even know it. Okay, perhaps it’s not an actual gold mine, but something potentially better: home equity.

Your home’s equity is the difference between what your home is currently worth and how much you still owe on your mortgage. For example, if your home is worth $400,000 in today’s market and you owe $250,000 on your mortgage, you’d have approximately $150,000 in equity. Let’s examine a few key facts about home equity before we get to the heart of the matter:

• Home prices are up 1.5% year-over-year, reaching a 14-month high in July 2026. 
• Tappable equity has reached $11.7 trillion across 47.5 million mortgage holders, while total mortgage-holder equity reached $18 trillion in Q2 2026. 
• The average mortgage holder has approximately $212,000 in tappable equity.

That equity could give you more financial flexibility than you realize. Let’s dive into how.

8 ways to use your equity

As you make mortgage payments each month and your home’s value changes, the amount of equity you have could change, too. And depending on your financial goals, there may be ways to put some of that equity to work.

From opening a Home Equity Line of Credit (HELOC) to funding renovations, here are some options to consider.

#1. Access your equity with a Home Equity Line of Credit (HELOC)

A Home Equity Line of Credit (HELOC) allows you to borrow against the available equity in your home, using the property as collateral.

Unlike a loan that gives you access to the full amount upfront, a home equity line of credit is a revolving line of credit. Think of it more like a credit card. During what’s known as the draw period, you can generally borrow from your available credit line as needed, up to your approved limit. As you repay what you borrowed, that credit could become available to use again during the draw period.

That flexibility can make a HELOC useful when you don’t know exactly how much money you’ll need at once.

With a HELOC from Rate, you could receive your initial funds at a fixed rate. Then, as you pay down your balance, you may be able to pull additional funds during the draw period. Each additional draw receives a fixed rate based on rates at that time.

Qualified homeowners may be able to access up to 85% combined loan-to-value (CLTV), with funds available in as few as five days. That flexibility can make a Rate HELOC useful when you need funds for renovations, major expenses or other financial goals over time.

#2. Bring that home renovation project to life

Speaking of HELOC, these equity-tapping tools are particularly useful for funding home improvement projects that could be difficult to cover with your daily budget. That could be redoing the kitchen, upgrading the backyard or finally replacing the roof.

If you’re thinking about using your equity to pay for different stages of a home renovation as the work progresses, a HELOC could work better than borrowing the entire project’s estimated cost upfront.

There may also be tax considerations. In some circumstances, interest paid on a HELOC may be deductible when the borrowed funds are used to buy, build or substantially improve the qualifying home securing the loan. For more details on this, speak with a qualified tax professional to see if this is something possible for your specific situation.

#3. Buy something new

Your equity doesn’t need to stay tied to your current home.

Maybe your family has outgrown your current home, or you’re ready to downsize to a space with less upkeep. If your needs have changed since you bought the property, selling could allow you to put the proceeds toward your next move. 

How much money you walk away with depends on factors including your remaining mortgage balance, sale price and selling expenses. Understanding your estimated equity can give you a better idea of what you may have available for your next home.

#4. Sell, then rent

Buying another home isn’t the only option after selling.

Some homeowners choose to sell, access the equity they’ve accumulated and move into a rental. This could make sense if you’re looking for more flexibility or simply want a break from the responsibilities that come with homeownership.

If you need a little bit more time to get your ducks in a row, a leaseback arrangement could work in your favor. When agreed upon as part of the transaction, a leaseback could allow sellers to remain in the home temporarily after closing while renting it from the new owner.

#5. Consider a cash-out refinance

A cash-out refinance is another great way to access home equity. Instead of adding a separate line of credit, you replace your existing mortgage with a new, larger loan and receive the difference in cash.

But remember to look beyond the amount of cash you could receive. Because you’re replacing your old mortgage, your new interest rate, monthly payment and loan terms could change. Get in touch with a Loan Officer to evaluate the full cost of refinancing, as well as:

• How much you need
• How you plan to use the money
• What your broader financial picture looks like

#6. Think about a Home Equity Conversion Mortgage 

For eligible homeowners age 62 and older, a Home Equity Conversion Mortgage (HECM) may offer another way to access your home’s equity.

A HECM is a type of reverse mortgage insured by the Federal Housing Administration. Eligible homeowners could be able to convert a portion of their home equity into funds while continuing to own and live in the home.

If you think this could be something you may be interested in, our Loan Officers can help walk you through it. 

#7. Buy another property

Depending on your financial situation, home equity could potentially help you fund the purchase of another property.

Whether it’s a second home, vacation getaway or an investment rental, your home equity could make it happen. Before going all-in, don’t forget to think about the additional costs that come with owning another home, including:

• Mortgage
• Taxes
• Insurance
• Maintenance
• The unexpected 

#8. Cover major expenses

Everyone’s financial situation is different, and home equity could potentially help you fill in the gaps. Depending on your needs, you may consider tapping your equity to meet the following goals:

• Zeroing out credit cards
• Removing student debt
• Paying off medical bills
• Funding college tuition
• Creating an emergency fund
• Paying for a once-in-a-lifetime event, like a wedding

Keep in mind that accessing equity means taking out debt secured by your home. If you’re considering using home equity for a non-real-estate-related financial goal, compare your borrowing options, costs and potential risks before deciding what makes sense. 

Ready to put your home equity to work? 

Mortgage payment after mortgage payment, you’ve worked hard to build equity in your home. Deciding what to do with it starts with understanding how much you may be able to access and which financing options fit your bigger goals.

Whether you’re planning a renovation, considering a major expense or simply want a financial resource available when you need it, a HELOC could give you a flexible way to tap into your equity.

Ready to learn more? Connect with a Loan Officer to explore your options and find out what works best for you.

Using funds from a Cash-out Refinance to consolidate debt may result in the debt taking longer to pay off as it will be combined with borrower’s mortgage principle amount and will be paid off over the full loan term. Contact Rate for more information

Rate does not provide tax advice. The consumer should always consult a tax advisor for information regarding the deductibility of interest and other charges in their particular situation.