Is Cashing in the Equity from My Home Worth It?

By Kelli Blystone on March, 20 2025
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Kelli Blystone

If you’ve been paying down your mortgage and your home’s value has increased over time, you may be sitting on a significant amount of equity. The big question is: Should you cash in on it? Tapping into your home equity can be a smart financial move—but only if used wisely. Let’s break it down.

 

What is Home Equity?

Home equity is the difference between what your home is worth and what you still owe on your mortgage. As you pay down your loan and as your home appreciates in value, your equity grows. Think of it as a nest egg that builds over time, one that you can potentially use to your advantage.

For example, if your home is worth $300,000 and you owe $200,000 on your mortgage, you have $100,000 in home equity. The more equity you have, the more financial flexibility you may have.

 

What Are the Best Ways to Use Home Equity?

Cashing in on your home equity isn’t a decision to take lightly, but when used strategically, it can help you achieve important financial goals. Here are some of the best ways to put your home equity to good use:

  • Home improvements – Upgrades like a kitchen remodel or a new roof can increase your home’s value and improve your quality of life.

  • Debt consolidation – If you have high-interest debt, such as credit cards or personal loans, using your equity to pay them off could save you money on interest.

  • Investing in education – Using home equity to finance college tuition or career training can be a long-term investment in your future.

  • Emergency expenses – Life happens, and sometimes major expenses arise. Your home equity can provide financial relief during unexpected situations.

  • Real estate investments – Some homeowners use equity to purchase rental properties or vacation homes to build wealth over time.


How Do I Access My Home Equity?

A cash-out refinance is one of the most common ways to tap into your home’s equity. This involves refinancing your current mortgage for a higher amount than what you owe and taking the difference in cash. While this may sound strange, consider that you’re taking the money you’ve already paid into your home and turning it into cash you can use now.

If you’ve lived in your home for five or more years, it’s likely that you have quite a bit saved up as equity in your home. The cash-out refinance takes this equity that is typically inaccessible and turns it into cash you can use for home improvements or any of the examples we listed above.

Here’s a simple breakdown of how it works:

  1. You apply for a new mortgage that’s larger than your existing loan balance.
  2. After closing, you receive the difference in cash.
  3. You repay the new loan over time, just like your original mortgage.


Is Cashing in on Your Home Equity Right for You?

If you’re considering a cash-out refinance, the key is to have a solid plan for the funds and ensure it aligns with your financial goals. Consulting with a trusted lender like Ruoff Mortgage can help you understand your options and determine if it’s the right move for you.

Ready to explore the options for the equity in your home? Contact Ruoff Mortgage today and let’s see how we can help you make the most of your investment.