06/30/26

We wanted to use this week’s blog to talk about a money-related topic. While we always suggest asking a loan officer or financial adviser any specific financial questions, we wanted to talk about home equity! Why? Because No. 1) it’s one of the top reasons homeownership rocks, and No. 2) the topic will be discussed more and more if mortgage rates continue to trend down in the coming months.

So, what is it? Home equity is the difference between what your home is worth and what you still owe. For many American homeowners, it’s their largest financial asset and can be used in various ways. In fact, a range of financial avenues exists specifically to help you put that value to work.

Refinancing. Think of refinancing as trading in your current mortgage for a new one, often with a new principal and different interest rate. A cash-out refinance allows someone to borrow more than they owe on their home and pocket the difference. Usually, borrowing money this way has lower interest rates than other types of loans. If your home’s value has increased (and it probably has if you have owned your home for more than a few years), you may have enough equity to take cash out for things like home improvements, debt consolidation or other expenses. However, it’s important to remember that this will increase the overall amount you owe, which may increase your monthly payments.

Home Equity Loan. A home equity loan is a second mortgage that gives you a fixed lump sum, repaid over a set term at a fixed interest rate, while leaving your primary mortgage untouched. Because the rate and payment are predictable, you always know what you owe. It is important to realize that you will have a second mortgage to pay off if you do this, and if you sell your home, you will have to pay off the entire loan balance as well as the original mortgage. Because of that stipulation, this route is generally advised only if you’re not planning to sell anytime soon. When would a move like this make the most sense? When there’s a one-time expense to cover.

HELOC. A Home Equity Line of Credit (HELOC) works more like a credit card than a loan. You’re approved for a credit limit based on your equity, and during your draw period, you can borrow, repay and borrow again as you need. You only pay interest on what you actually use. This option works well for homeowners with ongoing or unpredictable expenses who want an accessible financial safety net without having to borrow a lump sum upfront.

Reverse Mortgage. Available to homeowners 62 or older, a reverse mortgage converts part of your home equity into cash as a lump sum, monthly payments or a line of credit, with no required monthly repayment. The loan balance grows over time and is typically repaid when the home is sold, when the homeowner moves out or dies. Retired homeowners who are equity-rich but cash-limited and may be looking to supplement Social Security or retirement income, cover healthcare costs or simply age comfortably without selling their home might consider a reverse mortgage.

As you can see, there are a lot of options to consider when it comes to your home’s equity, but it’s good to know that it’s there. If you take a route that requires title and settlement work – such as refinancing – we’d love to be your choice for those services. Reach out to your local branch anytime!